Preamble

The House met at Eleven o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PAPUA NEW GUINEA (GIFT OF A CLOCK)

Mr. Speaker: I have received from the Speaker of the National Parliament of Papua New Guinea a report of their proceedings on welcoming a delegation from this House on 27th February 1978. I will give instructions for the text of the relevant resolution to be printed in the Journal. The resolution reads as follows:
That we, the Members of the National Parliament of Papua New Guinea, convey to the Commons House of Parliament at Westminster, our nation's sincere thanks for the gift of the Table Clock to mark the continuing relationship which exists between the Mother of Parliaments and this Parliament.

NEW WRITS

For Manchester, Moss Side, in the room of Frank Hatton, Esquire, deceased.

For Penistone, in the room of John Jakob Mendelson, Esquire, deceased.—[Mr. Michael Cocks.]

Orders of the Day — HOMES INSULATION BILL

As amended (in the Standing Committee), considered.

Clause 1

GRANTS FOR THERMAL INSULATION

11.7 a.m.

Mr. Tim Sainsbury: I beg to move, Amendment No. 1, in page 1, line 9, at end insert:
either without any insulation or whose existing insulation does not reach the specified building regulations in force".
We discussed this amendment at some length in Committee. I shall, therefore, try to be brief on this occasion rather than going through the arguments that we rehearsed upstairs.
The purpose of the amendment is, I think, clear. It is to make the modest grants which the Bill provides available both to householders without any roof insulation and to those householders who either have part of their roof space insulated or have insulation in their loft which is inadequate by the standards prescribed by the building regulations currently in force.
I should say at once that we welcome any improvement in those standards, however long delayed, and we also welcome and thank the Under-Secretary for the speed with which he has prepared and released the draft of the first scheme, as he promised in Committee.
I do, however, note that this is the third draft and we were not privileged to see the first or second drafts. We are left wondering what might have been in or what might have been out of those earlier editions. I draw the Under-Secretary's attention to what seems to be a contradition in the explanatory memorandum which he helpfully attached to the draft of the scheme, which seems to be relevant to the purpose of this amendment.
Paragraph 6 of the explanatory memorandum states:
The insulating quilt has to be laid to a minimum thickness of 80 mm.


We certainly approve of that.
There will be nothing to prevent the householder installing more than the minimum thickness
—so even if he is not encouraged, we are glad that he will not be prevented—
but the present intention is that grant will be limited to the notional cost of the first 80 mm. This prescribed thickness of 80 mm in respect of which it is intended that grant shall be payable has been selected as being the most cost-effective for the purpose of deploying the limited resources available.
That is important, but in paragraph 15 an apology is given for excluding those dwellings which already have some insulation:
This is again a question of priorities. If a house already has, for example, 40 mm of insulation it is several times more effective in energy terms to put an initial 40 mm in another similar house than to use that 40 mm to top up insulation in the first house.
Those two paragraphs read in conjunction could me misleading. Paragraph 6 says that 80mm is the most cost-effective thickness but paragraph 15 says that it is not cost-effective to add 40mm to 40mm. There seems, therefore, a strong case for accepting at least the spirit of the amendment.
Also, it is unfair to exclude those with a partially or inadequately insulated roof space. They may feel aggrieved when a neighbour who has no insulation can get £50 towards this work.
This exclusion will complicate the scheme. Before they can ask for a grant, householders will have to certify that they have no insulation. It might even pay them to take out what little they have. That will add to the burden of administration. I hope that the Under-Secretary will go some way to meet this case which was strongly argued in Committee and supported by all the opposition parties.

Mr. Peter Viggers: I support the amendment and I ask the Minister to put aside any briefs and consider the matter again. As I pointed out in Committee, if a house had inadequate insulation, a householder might throw it away to make himself eligible for a grant. The Minister said that he was less cynical about human nature. I should make it clear that I was not advocating that kind of behaviour. I simply wanted the Minister to realise that this legislation will encourage people to behave foolishly.

People with the foresight to put in some insulation are the only people who will not be able to benefit. That is preposterous.

11.15 a.m.

Mr. Geoffrey Finsberg: The opening words of my hon. Friend the Member for Gosport (Mr. Viggers) might prove unnecessary. If the Minister's brief is to accept the amendment or at least its spirit, I hope that we will disregard what my hon. Friend said.

The Under-Secretary of State for the Environment (Mr. Ernest Armstrong): The amendment would have to be reworded, but I want to make nothing of that. I want to discuss this important matter on its merits. I would not repudiate anything said about cost-effectiveness, but we must use the limited money available to the best possible effect. That is what the first scheme in the Bill is about. As the hon. Member said, we considered it in Committee. I assure the hon. Member for Gosport (Mr. Viggers) that, far from my just reading a brief, we have considered the priorities carefully.
I am resisting the amendment, not because of any brief, but because after careful consideration, we considered that the best use of money to achieve the purpose of the Bill—to conserve energy—would be to accept the priorities in the first scheme.
There is no dispute that if one has, say, 25mm of insulation in one's loft, additional energy savings can be secured by adding further insulation. But that is not the issue before us. Nor is the argument that as energy prices increase the benefits from such topping up will increase. That again I do not dispute. But the fact is that the additional benefits to be secured from each additional thickness of insulation decrease progressively. It is much more cost-effective to put an initial amount of insulation in an uninsulated loft than it is to add further insulation to a loft which already has even a minimal amount of such insulation. In fact 60 per cent. of improved performance in energy-saving terms comes from the first 20mm of insulation, compared with about 20 per cent. from the second and a progressively decreasing amount from each additional slice.
That is the answer to the point made by the hon. Member for Hove (Mr.


Sainsbury) about an apparent conflict between two paragraphs in the Explanatory Memorandum. Of course it saves energy to top up, but it is a question of degree, and the significant figure of 60 per cent. improved performance from the first 20mm.
Thus, the first priority must be to tackle those houses with no loft insulation at all. That offers the greatest savings, because the person with no insulation will be losing heat much more quickly than someone with even 25mm. That is the answer to those who have installed 20mm or 25mm. They will either be living more comfortably or they will be saving energy. It is for them to make the choice—although, obviously they might feel aggrieved when they see a neighbour getting a grant. This is a conservation measure, not a social measure.
In Committee it was said that people would not be allowed to put in 20mm of insulation if that was all they could afford. That is true. The first point to make about such a proposal is that insulation quilt is not generally available in thicknesses below 60mm. Secondly, if we are giving grant for the initial provision of insulation, we must grant-aid the most effective thickness having regard to immediate cost effectiveness, the probability of increasing energy costs and the limited resources available. It is not a matter of less than 80mm being wholly inadequate any more than 80mm is wholly excessive. It is a question of balancing the various factors and our judgment is that grant-aiding 80mm will be the most effective means of using the available resources.
The hon. Member for Hove has performed a service this morning. When we are considering the second and further schemes we shall bear in mind what has been said. In the circumstances I hope that he will withdraw the amendment.

Mr. Sainsbury: The Under-Secretary's last words were helpful because until then I had been disappointed with his reply. We are reassured to know that he has taken note of what has been said in Committee and in the Chamber. He has been a little more encouraging with regard to the second scheme. We are conscious that this Bill would allow a Secretary of State, if he were so minded, to intro-

duce a second scheme a little earlier than the Under-Secretary currently intends. We accept the helpful tone of the Minister's reply. I believe that our criticisms of the scheme remain, but in the light of what has been said, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Michael Morris: I beg to move Amendment No. 2, in line 23, at end insert—
(3A) The second scheme shall be for the improved insulation of living room windows in the case of dwellings without roof spaces or with inaccessible roof space.'.
This amendment has two purposes. The first concerns equity of treatment between different categories of householders while the second purpose has to do with performance in relation to energy-saving potential. The Under-Secretary has agreed that perhaps the most significant shift between the initial stages of this Bill and the present time is that the Government have moved from viewing the Bill as a finite measure of set dimensions and vague possibilities for future development to one which they recognise will have further beneficial factors which can be introduced in the not-too-distant future. If this is now to become a dynamic programme, it is much to be welcomed.
As the Minister knows, there are 14 million dwellings with lofts which it is possible to insulate. Governments of both political complexions have spent money on energy-savings campaigns such as the "Save it" scheme and this has resulted in about 7 million dwellings being insulated. We could argue that these are the wise people who responded to the Government's exhortations. This Bill caters for the 7 million who were unwise in the sense that they did nothing. The Government have introduced their public sector scheme to deal with those in that 7 million who are in the public sector. This Bill is concerned with the private sector.
The amendment asks the Minister what he proposes to do about the 5 million householders who are still left out of consideration, who did not have an opportunity to insulate their lofts either, because they do not have a loft or cannot get into it. If we can prove that the energy saving from some alternative


form of insulation for these 5 million is at least as great as that available to those who insulate their lofts, on the grounds of equity such an alternative source ought to be considered, if not within the Bill, certainly very shortly after its passage in a second scheme.
These people were not unwise, in that they did not have the chance to insulate their lofts. There are about 1½ million such people in the public sector and about 3½million in the private sector. Those in the public sector do not come within the scheme recently announced by the Government for that sector whereby financial support is given to local authorities.
In the private sector the 3½million dwellings comprise in part the older cottages, those built in past centuries, where the roof space is narrow and inaccessible with no chance of entry except in an emergency. The numbers are hard to estimate but they probably account for over 100,000 or more of that 3½ million. The second group within that 3½ million is made up of flats. Many of the people excluded will be in the private rented sector. In addition, there are the owners of flats. On grounds of equity I believe that these people have a strong case for consideration.
Is there a form of insulation which is as cost-effective for these 5 million dwellings as loft insulation is for the other dwellings? I will not go into the detail that we went into in Committee on the basic argument concerning double glazing in the living room. Hon. Members will recognise that the old feeling that loft insulation was in all cases the most effective method is now highly questionable. There is firm evidence that the double glazing of a living room is at least as cost-effective at today's prices. This is logical because the living room is kept at a high temperature. It is the one warm room in the house, irrespective of whether there is central heating. Such a room offers a great potential for energy saving.
We know that in some cases the capital cost of double glazing is high, but we are informed that the range of costs is somewhere between£10 a square metre on a "do it yourself" basis and£25 a square metre for the more sophisticated installations. I am told that calculations,

in which the Department has been involved, suggest that the saving is in the area of£17 per annum. At current prices the economics of selectivity double glazing rooms heated to a high standard, essentially the living room—and I am sure that we could define such a room—are at least as favourfable as most cases of loft insulation. It the case of non-centrally heated houses the economics are even more favourable.
I believe that grant aid should be provided at least to cover the cost of double glazing living rooms. An argument can be made for all properties to be treated in this way, but for the 5 million dwellings excluded from the present programme I believe that on equity and energy-saving grounds a strong case can be made out for their inclusion in a stage 2 operation which should follow swiftly from the initial programme.

11.30 a.m.

Mr. Armstrong: The purpose of this amendment is to lay down for the second scheme under the Bill a provision for the insulation of living room windows. Double glazing would obviously be one of the measures to be taken.
I am grateful to the hon. Member for Northampton, South (Mr. Morris) for his opening remarks. We cannot over-emphasise the importance of the conservation of energy. The Government have this subject constantly under review. Obviously, once the first scheme has been in operation this winter, we shall be able to assess it as a result of our monitoring.
An important issue of principle is at stake here. Hon. Members will appreciate that the primary objective of the Bill is to implement the Budget proposals for grant-aid for insulating roof spaces and water supply installations. The secondary objective is to give to the Government the ability to act flexibly and quickly to bring forward further schemes, as and when need requires and resources permit, and therefore a review of what the first scheme does and how it operates will be very important.
This amendment would restrict this flexibility by laying down in advance what the second scheme should cover. It would prevent a second scheme covering, for example, topping up of loft insulation, or measures to insulate dwellings with flat roofs, or, indeed, the sort


of measure which we shall be discussing designed to held the elderly, disabled and others most vulnerable. If this were to be done, we would need to be very sure that the measure to be included under this prescribed second scheme is clearly and unequivocally the most cost-effective and desirable measure after those prescribed in the first scheme.
I have read carefully the remarks of the hon. Member for Northampton, South in Committee, when he quoted from the brief supplied to Committee Members, but not, I am sorry to say, to me, on behalf of Pilkington Glass. I have since obtained a copy, but although my professional officers have examined the case made, the absence of details, particularly on the assumptions made, has meant that they have found it difficult to evaluate. Nor has there been time for detailed consultation either with Pilkington or with professional officers of the Department of Energy.
I accept that in some, perhaps in many, houses the double glazing of the living-room window could bring appreciable benefits, but I would want to examine the evidence supplied by Pilkington and other sources of information a good deal more closely than we have had time to do since the Pilkington brief was supplied before I was satisfied that we should commit ourselves now in the way suggested by the amendment.
In considering the precise terms of the amendment, I am not sure that it is established that there is more justification for double glazing, but this is one of the things that we can go into. I also have considerable doubts about the variety of interpretations which no doubt can be placed upon the term "living-room".

Mr. Mike Thomas: My hon. Friend gave some indication in Committee on the question of draught-stripping, which is relevant in the sense of what is the first priority for the second scheme. He was positive about it in Committee. It would be more advantageous, particularly to the elderly, for draught-stripping to be an early subject of his attention, and surely it should be an earlier priority than living-room window insulation.

Mr. Armstrong: Draught-stripping is one of those measures that I have very much in mind. The fact that it is being done in the public sector is an indication of the importance we attach to it. It is precisely because we want to consider very carefully the evidence from Pilkington and, indeed, other sources, and to weigh the merits as between one and another so as to get priorities right, that we want flexibility. For that reason, I do not want to be tied down by the amendment, but I take on board what my hon. Friend has said about draught-stripping, which can and will play a great part in the conservation measures that we will be taking in future.
The brief supplied by Pilkington Glass and, more important, the detailed evidence which lies behind it will be an important factor in our consideration of further measures to be introduced in later schemes under the Bill, and I undertake to have these matters examined very closely as soon as we are able to do so, and to take any necessary consultations as well. But I ask the House not at this stage to tie our hands in relation to future schemes so that we are required to introduce the particular measures referred to before what may turn out to be some more deserving measures and have rather more priority. In the light of that explanation, I hope that the hon. Gentleman will feel able to withdraw his amendment.

Mr. Michael Morris: I am grateful to the Under-Secretary of State for his positive response. What he is saying is that he wishes to have further consultations with the manufacturers and interested parties about the whole range of insulation materials. That will be of great benefit and is to be greatly welcomed. We hope that it will be done with some urgency because there is now an abundance of information, and the matter should be brought to a positive conclusion.
I hope, in addition, that, as we move to a second scheme, we shall reflect on the point of equity. It is an important point that if someone happens to be living in a rather old cottage there are forms of insulation which should be of benefit to him, particularly because he is likely to be on electricity or oil and therefore in the fuel sector that is the most costly.
We should not ignore such people because they happen to be in a relatively small number of properties. There should be some means of ensuring that they can benefit at well. But in the light of the hon. Gentleman's positive response, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Armstrong: I beg to move Amendment No. 3, in page 2, line 4, at end insert—
'(4A) A scheme other than the first may pro-vide—

(a) for grants to be made only to those applying on grounds of special need; or
(b) to be made, in the case of those so applying, on a higher scale prescribed by the order under subsection (4).

(4B) For the purpose "special need" is to be determined by reference to such matters personal to the applicant as may be prescribed by the scheme, particularly age, disability, bad health and inability without undue hardship to finance the cost of the works.'.

Mr. Speaker: With this is will be convenient to take Amendment No. 4, in page 2, line 4, at end insert—
'(4A) In making other schemes the Secretary of State may make special provision with regard to the types of improved insulation which shall be eligible for grant to applicants who are pensioners, registered disabled or chronically sick.'.

Mr. Armstrong: My intention in moving this amendment is to respond to the wishes expressed by Members on both sides in Committee that the Secretary of State should have power to make special provision in future schemes for applicants who are pensioners, disabled or chronically sick.
The original amendment put down by hon. Members opposite in Committee would have enabled the Secretary of State to provide special rates of grant for such applicants. Looking to the future, one of the many uncertainties is the cost of undertaking further insluation measures, and I agree that it would be desirable for the Bill to provide for the possibility of special grant rates and grant maxima for applicants with special needs. Subsection (4A)(b) as set out in the amendment is designed to meet this objective.
Like all other matters relating to grant rates and amounts, any such special provision would, by virtue of Clause 1(4) require an order made with Treasury

approval and subject to negative resolution by this House.
The earlier amendment, withdrawn by the hon. Member for Hove (Mr. Sainsbury) in Committee, would, I think, have done as I have suggested. However, on further consideration of the whole question of applicants with special needs, I have come to the conclusion that the Bill should be further amended in order to permit the introduction of a scheme or schemes aimed specifically at the thermal insulation needs of such applicants. This would enable the Secretary of State to introduce a scheme offering grant-aid for a measure or measures designed particularly to help all or any of the special groups about which we are all concerned, and to limit grant availability to people falling within those groups. The first part of subsection (4A) as set out in the amendment provides the necessary power for this to be done.
I have also considered which groups of people should be eligible for these special provisions. As I said in Committee, there may well be groups with special needs other than those listed in the original amendment of the hon. Member for Hove. The second half of this amendment—subsection (4B)—has therefore been drawn in a rather more flexible way, but indicating clearly the particular issues which would be taken into account in determining eligibility for the special provisions to be made within a general scheme, or for the grants available under a scheme limited to those in special need. As hon. Members will appreciate, the main extension to the groups previously included is the case of financial hardship.
I hope hon. Members opposite will agree that in bringing forward this amendment I have honoured the undertaking which I gave to them in Committee, and that they and my hon. Friends will agree that the amendment has been drawn in a sufficiently flexible way to enable us to help those whose needs are greatest.

Mr. Sainsbury: We on the Conservative Benches welcome the Government's positive and speedy response to the amendment we put forward in Committee. We accept what the Under-Secretary said about the drafting of his amendment being flexible, with one proviso to which I shall turn later.
Our welcome for the amendment is all the warmer not only because of the


support it had in Committee, where the Government accepted its spirit and principle, but because we are becoming ever more aware of and better informed about, the importance of providing help to disadvantaged groups, especially the disabled and the elderly.
We are indebted to Mr. Malcolm Wicks for his book, "The Old and Cold", published the day before we started our Committee consideration of the Bill. It is a lengthy book, and we did not have time to read it before the Committee started. It gives factual evidence of the extent of the risk of hypothermia and the importance of doing something, for social as well as energy conservation reasons.
I believe that I am correct in saying that we still await another important report, that by the Research Institute for Consumer Affairs, which I understand was commissioned jointly by the Department of Energy and the Department of the Environment to examine case studies and determine what improvements could be made in heating arrangements for old people. On 28th July last year the Under-Secretary of State for Health and Social Security said:
The results of these case studies will be published in a booklet before next winter."— [Official Report, 28th July 1977 Vol. 936, c. 1119.]
I do not think that we had the booklet before "next winter", which is now some time ago. I hope that we shall have the benefit of this additional information as soon as possible.
I now turn to our Amendment No. 4. Does the hon. Gentleman think that his amendment embraces its purpose? The amendment says:
In making other schemes the Secretary of State may make special provision with regard to the types of improved insulation which shall be eligible for grant to applicants who are pensioners, registered disabled or chronically sick.
I emphasise the word "types". The wording of our amendment could be brought into line with the Government's amendment. This is another aspect, in addition to the aspect to which the hon. Gentleman referred, of providing help to disadvantaged groups.
As my hon. Friend the Member for Northampton, South (Mr. Morris) has just pointed out, it is at the very least

arguable that for those who are confined to one room, a living room, which does not have a roof space above it, the most effective form of insulation is double glazing of the living room windows. The Minister has undertaken to have further consultations on that matter.
In addition to allowing grants, or a higher scale of grant, to be made to those applying on grounds of special need, our amendment would allow those concerned to receive grants for other forms of insulation. This is an important point. The hon. Member for Newcastle upon Tyne, East (Mr. Thomas) rightly referred to draught-stripping as an important aspect of insulation, one which is accepted for public sector housing. It could be particularly useful for the disabled.

Mr. Mike Thomas: I in no way differ from the hon. Gentleman or my hon. Friend the Under-Secretary as to motives. But I wonder why—perhaps my hon. Friend or the hon. Gentleman knows the answer—the matter with which we are now dealing could not be dealt with under subsections (2) and (5). The questions of sorts of applicants, types of insulation, priorities to be observed between different applicants and so on could all be dealt with under the existing methods.

Mr. Sainsbury: I hope that the Minister will reassure us that the making of grants for other types of insulation to those applying on grounds of special need will be covered in the schemes that are brought forward. Can the hon. Gentleman also assure us that the further scheme providing help for those in special need will be brought forward very shortly? None of us doubts its importance.

11.45 a.m.

Mr. Armstrong: I understand that the report to which the hon. Gentleman referred is with the printers and should be available early next month. It is a valuable report, because it is related to the questions raised by my hon. Friend the Member for Newcastle upon Tyne, East (Mr. Thomas) and the hon. Member for Hove (Mr. Sainsbury).
The Government amendment covers the Opposition amendment on types of insulation. Under the amendment we could have a scheme—the report is very relevant here—that would deal exclusively


with the elderly, under various measures. We may well have to consider separate measures dealing with the particular circumstances in which old people live. They vary from place to place. We could well introduce different types of measures from which they would benefit whatever their circumstances.
As for the question of urgency, we were pressed very hard in Committee, where it was the unanimous desire to see an early scheme. It depends on resources and so on, but I should like to introduce measures as quickly as is reasonable and sensible.

Amendment agreed to.

Mr. Armstrong: I beg to move Amendment No. 5, in page 2, leave out lines 17 and 18 and insert—

'(a) in Greater London—

(i) as regards dwellings in a general improvement area or housing action area declared by the Greater London Council under the Housing Acts, that Council, and
(ii) otherwise, London borough councils and the Common Council of the City of London;
(b) elsewhere in England and Wales, district councils.'.

Mr. Speaker: With this amendment we are to take Amendment No. 6, in page 2, leave out lines 17 to 19 and insert—
'(a) in England and Wales (other than Greater London), district councils and the Council of the Isles of Scilly;
(aa) in Greater London, in an area declared by the Greater London Council to be either a general improvement area under section 28 of the Housing Act 1969 (as substituted by section 50 of, and Part I of Schedule 5 to, the Housing Act 1974) or a housing action area under section 36 of the Housing Act 1974, the Greater London Council, otherwise London borough councils and the Common Council of the City of London; and'.

Mr. Armstrong: The purpose of the amendment is to make the Greater London Council the authority responsible for payment of insulation grants in the general improvement areas or housing action areas that it has declared. As the Bill stands, the GLC cannot pay these grants at all. The London boroughs are the only grant-paying authorities in Greater London.
There is no difference in purpose or in effect between this amendment and that tabled by the hon. Member for Hamp-

stead (Mr. Finsberg). The difference is a matter of drafting. There is, for example, no need to specify the precise sections of the different Housing Acts.
Loft insulation is a requirement of house renovation grants, but is not itself eligible for renovation grant. Applicants for house renovation grants who are installing insulation will therefore need to make a separate application for insulation grant. This is not a bureaucratic or unnecessary requirement—quite the contrary.
The procedures which we have in mind for the insulation grant will be extremely simple and will avoid the complexities of the house renovation grant system. We intend to ask authorities to set aside a sufficient proportion of their resources for insulation grant to satisfy the demand from their renovation grant applicants. Because of the time lag between approval of project and payment of renovation grant, they should have adequate prior knowledge of the amount likely to be involved.
In Greater London, the GLC is the sole grant-paying authority for renovation grants in the general improvement areas and housing action areas which it has declared. As the Bill stands, people would have to apply to the GLC for their house renovation grant and to the appropriate borough for their insulation grant. This would be unnecessarily confusing, particularly to a householder seeking to obtain both grants, because the GLC is seen as the source of all grants for dwellings in these areas. We cannot reasonably expect the householder to distinguish between renovation grants and insulation grants. To him, they are birds of a feather.
It would also be difficult for the two authorities. The London boroughs would not necessarily allow for all the GLC house renovation grant applicants who required insulation grant. The GLC could not help these applicants either. The authorities might also have differing views about the work to be done.
It is therefore better to make the GLC the sole grant-paying authority in its GIAs and HAAs for both house renovation grants and insulation grants. Since the GLC can declare HAAs and GIAs only with the consent of the borough concerned, this would not seem to be a


matter which would in any way undermine the responsibilities of the boroughs. At present there are only eight GLC GIAs and HAAs in Greater London.
I hope that the hon. Gentleman will feel that the amendment covers the point he was making.

Mr. Geoffrey Finsberg: I am grateful to the Minister. I hope that he will forgive me if I speak rather slowly, because he might need some advice. He said that the amendment in his name is better than mine, and I accept that at once. But according to my reading of page 2 of the Bill, his amendment now leaves us with two subsections (b), which cannot he correct. My amendment would have given us a subsection (a) and a subsection (aa). According to the Minister's amendment, subsection (b) reads:
elsewhere in England and Wales, district councils.'.
However, he has not deleted line 20 in the Bill, which is also a subsection (b) and which reads:
In Scotland, islands and district councils.
Therefore, it may well be that his draftsmen are as inaccurate, or as otiose as mine.
Having said that, I should also like to ask whether I am correct in assuming that the Isles of Scilly are still included, because one distinguished Member of this House might be interested in any prospect of insulation grants. I think the Isles of Scilly are being left in, because they appear in line 19, which is not being deleted.
As always, parliamentary draftsmen are, on the face of it, more accurate than anyone else. It certainly appears that the Minister's most helpful amendment would cover the points that I have sought to raise. It makes sense that the GLC, which is already the sole grant-making local authority in its declared housing action areas and general improvement areas, should in those areas, be the local authority to make grants under the Bill. As the Minister has said, the amendment is designed to make this simple provision, which has the merit that its operation by the GLC can be easily incorporated into the council's existing administrative procedures which relate to home renovation grants. Without the amendment it might be found that the inconsistency as to the authority responsible for renovation

grants on the one hand, and insulation grants on the other, may cause the boroughs to make additional provision in their administrative arrangements relating to the processing of applications for the various grants.
No one would want to see that happen. Therefore, the Minister has most helpfully recognised this in what he has said. I am not quite sure whether he is yet in a position to answer my point. It might be a little difficult to continue talking to the amendment without necessarily repeating myself. I hope that the advice has reached him, and I am delighted to give my support to the amendment which he has proposed if, in fact, it is accurate.

Mr. Armstrong: I am grateful to the hon. Gentleman for slowing down his speech. I acknowledge that I constantly require advice. I am bound to say that in the changing society in which we live, my advice to my grandsons with regard to a career which would last them the whole of their lives would be to become parliamentary draftsmen. My admiration for those people never ceases.
I am told that if the amendment requires altering with regard to subsection (a) and subsection (b), no parliamentary action is necessary because the printers would correct it. I am also told that the Scilly Isles are included.

Amendment agreed to.

Motion made, and Question proposed, That the Bill be now read the Third time.

11.53 a.m.

Mr. Sainsbury: I said at the outset that we Conservatives had no intention of delaying the Bill. We welcome its intention. Our only regret was that it had taken so long to bring forward, and we still hold to that view.
Criticisms has been made of the Bill which I think the Minister and, I hope, those experts in his Department, have taken on board and will be reflected in further schemes. The most serious criticism of the Bill as it now stands is that there is still this element of unfairness as between one householder and another to the extent that help is available to those who have no insulation in their lofts or on their water tanks but it is not available to those who have some or inadequate insulation. In addition, help is


not available for some schemes which we Conservatives believe could be equally worth while.
This is particularly adverse for those who live in flats. Understandably, the majority of people who live in flats do not have a roof space. In particular where one has a flat which is several storeys above ground level, or if it is well exposed to the winds blowing off the sea in a south-westerly direction, as some in my constituency are, other forms of insulation, such as draught proofing or double glazing, would be equally worthwhile. But under the first scheme these are not eligible.
There is also the point that to some extent there is discouragement to provide the insulation to the higher standards which other countries now require. The Minister said that one cannot overestimate the importance of energy conservation. That is a sentiment with which we Conservatives would certainly agree. But we remain somewhat surprised that, having said that they cannot overestimate the importance of energy conservation, the Government have been somewhat slow in bringing forward worthwhile measures for energy conservation.
The Bill is not as good as it could be. It is not as good as we believe it should be. However, it does some good and we do not want to delay it. It has one great advantage, because in some senses it is an enabling Bill which provides for the Secretary of State to bring forward schemes. We now know the content of the first scheme and we have had an indication from the Minister as to what he might wish to see in the second scheme.
We confidently expect that others sitting where the Minister now sits will shortly have the opportunity of bringing forward further schemes. To the extent that the Bill in no way restricts the next Conservative Secretary of State from making more active, positive progress on energy conservation—and, indeed, provides him with the power so to do—we very much welcome the Bill.

11.56 a.m.

Mr. Geoffrey Finsberg: I should like briefly to add one word. Of late, the Department of the Environment has

taken to issuing some very helpful explanatory leaflets when regulations or new legislation come in. This will clearly be a fairly complex problem, because people may not understand the sort of language which discusses 20 mm. and 60 mm. or the difference between renovation grants and insulation grants. I therefore issue a plea that the Department continues the excellent start which it has made by producing a leaflet which can explain in ordinary language which our constituents can understand so that they know exactly what to apply for and what they are eligible for.
It might perhaps be helpful if a further precedent were followed and supplies were made available not merely to the local authorities but to organisations such as Citizens' Advice Bureaux, which do such excellent work. Perhaps such a leaflet might also go to Members of Parliament, who clearly will get queries on this point.

11.57 a.m.

Mr. Viggers: Having waited for some time for new building standards, we now find that loft insulation is to be 50mm. under the building regulations, yet under this Bill there is a requirement for 80mm. in order to qualify for a grant. It is extraordinary that the Government have put themselves in a position where they are applying different standards to the building regulations and to the Homes Insulation Bill.
Although the Bill has been described as an energy conservation measure, it is remarkable that no energy Minister has been present in the Chamber during Second Reading, in Committee, or on Third Reading. This point is relevant, and not simply a minor personal point, because the Bill was introduced by a Minister who amazed the House by saying that the largest loss of heat was through the loft. In fact, to anyone who studies the subject, it it well known that that is not true and that the largest heat loss is through walls. But it is also relevant—and I am not merely making narrow personal points—because we know that in this country a planned, coherent policy put across with conviction on energy conservation is badly needed, and that is just what we do not have.
Loft insulation lends itself to a national and imaginative scheme. One has only


to think of the programme for converting houses from town gas to natural gas. That was a major national programme co-ordinated by the British Gas Corporation. A programme of loft insulation could lend itself to a similar campaign where people living in specified roads would know when the men were coming to insulate lofts in the area and that theirs would be left out if they did not take part in the scheme. To have had such a scheme would have required some kind of leadership. However, this Government, being a Socialist Government, choose to adopt the Wilfred Pickles approach which is to "Give 'em the money."
There is only one disqualification for receiving the money under the scheme, and that is, if a householder has been thoughtful enough already to insulate his loft, he is not eligible under the Bill. This really is a charter for foolish virgins, and one is forced to say that delay and dither has been replaced by bungling. But that should not prevent us getting across the message that insulating lofts and lagging hot water tanks is the best investment that householders can make. If this Bill helps get across that message, the Opposition will not oppose it.

Mr. Roger Moate: I must apologise for entering this debate so late. The speed of progress took me rather by surprise.
I wish to make a short contribution on Third Reading which, in a sense, repeats what I said during the earlier stages of the Bill. It is to register some complaint about the wrong priorities which the Bill introduces into our improvement programme.
I have no objection to the basic principle of providing improvement grants for the insulation of lofts. It is an excellent idea in principle. What I find objectionable—and the same goes for many of my constituents—is that the Government can find money for this proposition at a time when they have to reject urgently needed improvement grants for other desirable cases.

Mr. Armstrong: Where?

Mr. Moate: I can tell the Minister where. It is in the Swale district of my constituency.
I do not regard this as a party issue. There is general agreement about the need to have a first-class improvement programme. A deputation from Swale came to see one of the Minister's colleagues about this matter, and my constituents were given a sympathetic response and told that at a later stage in the year additional money might be forthcoming to help them. But that money is not there at present.
I have a case in mind which is very relevant. Yesterday, I received a letter informing me that the council was not able to give an improvement grant because it had no money.

Mr. Speaker: Order, This is Third Reading, and the hon. Member must direct his remarks to what is in the Bill.

Mr. Moate: I hope that I shall be in order in saying that I do not think that the Bill should have a Third Reading until—

Mr. Speaker: That is permissible, of course. But the hon. Member is not entitled at this stage to say what he thinks ought to be done in place of the Bill. He must discuss what is in the measure.

Mr. Moate: Then, may I give my reasons for thinking that the Bill should not have a Third Reading?

Mr. Speaker: It is no good the hon. Member talking about other provisions which ought to be included. His remarks must be directed to the provisions which are in the Bill.

Mr. Moate: Perhaps I shall be in order if I say that the money provided by this Bill should be applied to another purpose. Will that be in order?

Mr. Speaker: Not if the hon. Member starts to outline the purposes.

Mr. Moate: I think that it will be sufficient for me to say that we have been deprived of money necessary for improvement grant programmes. I can quote many examples of houses which might be eligible for roof insulation grants but which cannot have the necessary money to build inside toilets when young children are having to use chemical flush toilets.

Mr. Armstrong: Absolute nonsense.

Mr. Moate: The Minister says that is nonsense. I can give him chapter and verse. It is the absolute truth.

Mr. Speaker: The hon. Member can give chapter and verse some other time.

Mr. Moate: I shall do it some other time. I simply wish to register a protest on behalf of people who have been deprived of much-needed improvement money. Preference is being given to other measures which do not deserve priority and other areas are getting preference over my constituency.

Mr. Armstrong: I am grateful for the very constructive suggestions made in Committee and again this morning on Report. In relation to further schemes, we shall consider such matters as double glazing, draught-stripping, and so on, but without commitment to any schemes which will be brought forward. Certainly we shall bear in mind all that has been said.
The Government take very seriously the conservation of energy, and I speak with conviction when I say that. But we had to find a simple scheme which was easy to administer and, above all, easily understood. I take on board what the hon. Member for Hampstead (Mr. Finsberg) said. People are put off improving their homes because of all the forms

and bureaucracy. That is why this scheme is so simple. We hope that it will be easily understood. An explanatory leaflet will be issued, and we are also in touch with voluntary bodies to make sure that the elderly and other vulnerable groups especially are aware of the grants that are available and what can be done.

Mr. Geoffrey Finsberg: Again this may be normal practice. If it is not, will the Minister undertake to look at the final draft of the leaflet to ensure that it satisfies him? If it satisfies him, I am sure that it will satisfy all of us.

Mr. Armstrong: I am grateful for that comment. I am always asking for the ordinary man's guide to all these matters. I have to answer hundreds of letters on rent legislation, and I think that the House knows how difficult it is to devise a form of words which is easily understood. We shall issue an explanatory leaflet with every application form, and I give the hon. Member the assurance that I myself will look at what is proposed.
This is one more measure in a series which the Government have brought forward to deal with this very important matter, and I commend it to the House.

Question put and agreed to.

Bill accordingly read the Third time and passed.

IRON AND STEEL (AMENDMENT) BILL

Not amended (in the Standing Committee), considered.

New Clause 1

REDUCTION OF BORROWING AND INVESTMENT LIMITS

'The borrowing and investment limits set out in section 1 above shall be progressively reduced in successive financial years by the total sum obtained by the Corporation from

(a) the realisation of assets, and
(b) such injections of private capital as may be obtained from joint venture projects.'. —[Mr. Norman Lamont]

Brought up, and read the First time.

12.8 p.m.

Mr. Norman Lamont: I beg to move, That the clause be read a Second time.
The purpose of the clause is to ascertain the Government's attitude to increasing the number of joint ventures with private enterprise which the British Steel Corporation might consider embarking upon and to the sale of assets. It is the view of the Opposition that, in the present circumstances of the Corporation, these two courses of action ought to be considered because they are one way in which the very weighty calls on the taxpayer might be reduced.
In the course of the Second Reading debate, considerable interest was shown in the possibility of selling off some assets, especially by hon. Members who had been considering those constituencies where plants were to be closed because they were not profitable.
In a number of instances which have been much publicised the Corporation also wanted to close plants, even though they were profitable. Altough the plants are making money they are old fashioned, and they do not fit in with the Corporation's overall plan. But that is not necessarily an overwhelming argument for closing them. A number of them, because they are fully depreciated, are making money and could be fitted into someone else's business. The Opposition believe that consideration should be given, in the event of closure, to selling them off to other investors.
The argument is put that we must not damage the commercial interests of the Corporation, but it does not say much for the costly investment in these great steel cathedrals if the Corporation is not confident of meeting competition from what it calls old-fashioned plant.
Then there is the consideration of the jobs that will be lost. If an old-fashioned plant is perhaps making money but the Corporation does not think that it will fit into its activities, it would be far better from the point of view of jobs if the plant were offered to private entrepreneurs. This suggestion should be considered seriously.
My hon. Friend the Member for New Forest (Mr. McNair-Wilson), who cannot be here today, took up the matter directly with the chairman of the BSC. When ne saw an advertisement in the newspapers for the Corporation asking people to invest in areas where there were to be closures, he wrote to the Corporation asking whether it would be prepared to sell complete steel works. He received an answer from Sir Charles Villiers on 30th March.
BSC would of course be interested to hear if there were purchasers for complete steel works. This is something that we would be ready to discuss either directly or through BISPA. I should, however, point out that the equipment in each case is very old-fashioned and would not be suitable for modern economic operation. Indeed, with steel prices at their present levels, I doubt whether even the hardiest investors would be able to work up an attractive proposition.
That reply from Sir Charles was clear. He doubted whether old-fashioned plants would be attractive to any business, but he was prepared to consider selling them.
It was after Sir Charles had made some subsequent remarks in Germany which seemed to contradict what my hon. Friend had been told that he wrote again to Sir Charles and received another letter on 24th April. It said:
At this time of continuing over-capacity in steel BSC must safeguard its commercial interests in any deal involving the sale of any of its assets.
That was clearly a shift in position between the two letters. As my hon. Friend said, if Sir Charles had intended that the plant, if sold, should be used purely for manufacturing jam tarts, for example, he would not have entered his caveat about doubting whether any investor would be able to make a go of


producing steel at these plants. Regardless of whether they are profitable or unprofitable—and some of them certainly are profitable—we believe that from the point of view of jobs the BSC should consider selling them to the private sector rather than closing them.
I suspect that many trade unionists will be disappointed if the Government intervene in this matter, and if the shift in the position of the Corporation is attributable to political interference.
Today the production of steel will stop at Shelton. The Secretary of State has decided not to intervene. Shelton is precisely the sort of area where perhaps one could have considered some sort of proposition. It has been operating at 75 per cent. capacity, but making a profit. Many people consider that it could make profits of £3 million or £4 million if only it had its own electric are furnace. Since the Corporation is losing about £500 million a year, it seems extraordinary not to consider selling off either profitable or unprofitable assets which do not fit in with its strategy.
What would any commercial company do if it was faced with losses on that scale? It would go through its assets and see what could be sold in order to reduce the losses. This point was made clearly and very well in a report produced by the British Iron and Steel Consumers Council. Its chairman is the former Labour Minister, Sir Richard Marsh. That report said:
A company in the private sector faced with financial crisis on the scale of BSC would have to divest itself of activities not central to its business if it wanted to be able to fund the investment needed to maintain competitiveness and the ability to provide employment, in its central activities in the longer term.
The report goes on:
In its present situation there seems to be no justification for the BSC retaining any activities which have consistently failed to generate wealth and earn profits comparable to those of companies in similar lines of business in the private sector. They should be disposed of as going concerns. This would relieve BSC management of additional responsibilities and reduce the scale of public funds needed to support the BSC.
That point is extremely well made and well put. I very much agree with what Sir Richard Marsh has said.
In the past the Corporation has done this. The Minister of State knows that four years ago it was done in Manchester with the Openshaw works. The BSC wanted to close the works and they were sold to the private sector. They now employ 1,400 people. Similarly there were the Brymbo Works which were sold to GKN. Why cannot the Corporation consider such a policy again, particularly at a time of mounting losses?
It would also be a particularly good policy to consider at a time when more and more people are becoming doubtful about these large steel cathedrals. Many people wonder whether small is not beautiful in steel production, and whether electric are furnaces should not play a large part in our overall steel production.
Recently Sir Charles Villiers received a letter from Mr. Dick Eddy, one of the steel workers at Llanwern. He questioned the whole concept of large integrated works. He said:
Across the fields from Llanwern the future of strip steel already emerges—the Alpha private steel mill which will produce 800,000 tonnes a year on 500 men. Llanwern has problems doing that with 10,000 men.
Of course he is right. The progress of the Alpha steel mill has been remarkable. It has 300 workers producing one-tenth of the output of Llanwern which employs 10,000 men. The Alpha works are planning to work up production in their four electric are furnaces to 1 million tonnes, and after that they are considering installing cold rolling mills which can convert hot rolled coil into the cold reduced form that win be needed by the motor industry. If that expansion takes place, more men will be taken on—perhaps up to 1,000—and then Alpha Steel will be producing 1 million tonnes of steel a year with 1,000 men. That does not compare at all badly with Llanwern producing 2½ million tonnes with 10,000 men.
These large integrated plants have been very expensive and are very vulnerable indeed. Port Talbot and Llanwern, for example, are highly sensitive to industrial disputes and technical problems. One thing after another seems to stop them getting the long lines of production that are necessary to make the sort of profits that were projected when the money was invested.
We have the dispute with the blast furnace men. Before that we had Llanwern out of action last year with the electricians' dispute which lasted several weeks. For five years the Corporation has invested more than any other steel company in Europe in large plants, and yet it has consistently failed to achieve the economies and the returns that were projected.
This relates to the problem of selling off the small plants that the corporation wants to close. Work has been transferred from these small plants, such as Shelton, to these great steel cathedrals. Yet despite this transfer of work, they still remain disappointing in their results.
What happens when these interruptions to production occur at the large plants. The BSC finds itself having to import steel. The BSC is third in the league of the 20 European steel producers, but is the only one which has to spend £4 million a week on the importation of steel. Therefore, from a national point of view the Government, rather than seeking to close old plants, should examine the total national picture. That is far better than having to resort to imports. It would be far better if investment had been made by the private sector in these plants, perhaps with electric arcs. That is the way to cut imports and create more jobs.
We are not trying to tell the Corporation what it should do, but we are saying that the selling off of plant by any company which is in financial difficulties is a matter which the private sector would automatically consider. It is reasonable that the same disciplines should apply to the BSC.
The same argument applies to joint ventures. The BSC has gone in for such ventures with the private sector on a number of occasions in the past. There are plenty of such ventures overseas, and recently a good deal of attention has been given to the joint venture on which Redpath Dorman Long is embarking with the Dutch. We could do more on those lines because the calls by the Corporation on the taxpayer have been very large. One method of reducing that call is to go in for more joint ventures and to sell off plant which does not fit in with the Corporation's overall strategy.
That is why in the clause we have suggested that the overall borrowing from the Government could be reduced by the extent to which a policy on these lines is followed. It is sound commercial logic, it is what happens in the private sector, and I do not believe that a good argument can be made against our proposal. Therefore, I hope that the Government will support it.

The Minister of State, Department of Industry (Mr. Gerald Kaufman): The hon. Member for Kingston upon Thames (Mr. Lamont) used very fierce words indeed about the large integrated steel works. He said that they were very expensive and very vulnerable, and used a whole stream of hyperbole to describe them. But he must remember why we have this strategy. This is the basic strategy of concentrating bulk steel production in coastal sites, which was an integral part of the Conservative Government's plan for the development of the BSC. That policy was set out in the 1973 White Paper.
We know that the Opposition are trying to rewrite history in an effort to give the country the impression that what happened between 1970 and 1974 is nothing to do with them now, but it was that White Paper which began that process. It is fair to say that the strategy was selected against a different background with different market prospects from those obtaining today. It could well be that if those investment decisions were being taken now rather than then, some of them could well have turned out differently; but one cannot put the clock back. Approximately £1,000 million has already been spent on large plants, or will be required to complete develop ments which are substantially under way.
We are not talking about a situation that can be rectified by a stroke of the pen or by the acceptance of a new clause today. It is a strategy which was fully endorsed by the previous Government and which is now working its way through, except in cases where the strategy has been changed.
One of the problems is that this country, because of the market problems and other factors, is suffering from overcapacity in the steel industry. Whether mini mills or plants which the BSC now


seeks to close are in its hands or in private hands does not alter the capacity problem. Because of these factors, this country is faced with considerable overcapacity and transferring some of that over-capacity from public to private hands does not lessen the problem. The hon. Gentleman did not deal with that aspect.
I cannot add anything to what was said by my right hon. Friend the Secretary of State for Industry in a letter to the hon. Member for New Forest (Mr. McNair-Wilson) and in a letter from myself to my hon. Friend the Member for Stoke-on-Trent, Central (Mr. Cant) on the possible sale of plant which the Corporation is thinking of closing.
The operative sentence in my letter of 19th April was:
We would of course expect to be fully consulted in advance of any such proposals
—that is proposals in respect of the sale of steel works—
and would consider them very carefully.
I cannot go beyond that statement, but I would add that over-capacity remains over-capacity in whoever's hands it is.
The hon. Gentleman also spoke about joint ventures. As he fairly pointed out, the Corporation examines and participates in joint ventures from time to time. There may be circumstances in which such ventures make sense. The Corporation keeps under review activities of subsidiaries so as to ensure not only profitable operation, but the best use of resources for the group as a whole. There will be times when it is advantageous to dispose of shareholdings and form joint ventures. The deal with the Dutch group, to which the hon. Gentleman referred, leading to the formation of a joint company to ensure the future of RDL's platform building activities is a case in point. The Government expect to be consulted about significant disposals and we will not accept indiscriminate hiving off of the Corporation's assets which would in the long term weaken public enterprise in steel related activities. But if the Corporation considers that potential joint ventures are worth recommending to us, we will consider them.
I hope that after the prolonged discussion on the steel industry that has taken place for more than seven months

the hon. Gentleman will have come to the conclusion, as I have that, wherever one looks at the problems of the BSC, apparently easy solutions do not turn out to be easy at all. Therefore, I hope that the Opposition will not press the clause.

Question put and negatived.

New Clause No. 2

ANALYSIS OF REPORT AND ACCOUNTS

'No loans or payments may be made by the Secretary of State by virtue of section 1 above until the Corporation shall have provided the Secretary of State with a computer analysis of their reports and accounts for the last five years and of their current forecasts which would include current and anticipated levels of: (a) stocks, (b) wages and salaries, and (c) pension liabilities.'.—[Mr. Michael Marshall.]

Brought up, and read the First time.

Mr. Michael Marshall: I beg to move, That the clause be read a Second time.

Mr. Speaker: With this we may take New Clause No. 3—"Prospects for Steel"—and New Clause No. 4—Annual statements on project appraisals and costs of maintaining uneconomic plant.

Mr. Marshall: This group of clauses covers a vast canvas. I wish to express my appreciation for the way in which the Chair and the Clerks at the Table have been helpful in trying to consider this Bill.
It is one of the problems which this House continues to face that in view of the substantial amounts of public money that are now at stake in BSC, the House must properly concern itself in greater and ever-increasing detail with these matters. Hon. Members on both sides of the House would be happy if BSC's fortunes were such that we could see a substantial improvement so that we would not need to make a detailed examination both of the Department and, by implication, of the work of the Corporation.
We are proposing in this group of clauses to seek additional annual reports relating to the prospects for steel, annual project appraisals, and annual assessments of the cost of uneconomic plant. We are also seeking to bring in computer analysis to the report and accounts of BSC and future forecasts. The difficulties


in dealing with such a massive range of matters are immediately apparent.
12.30 p.m.
Let me explain what we mean by computer analysis. It is essential to make clear from the outset that we are looking at something which is not a vast exercise. The House and others outside are already undertaking such exercises and one of the concerns mirrored in the new clause is the feeling that the Department is not coming up with any clear assessment of the way that it views the work that the BSC is undertaking in this area.
We are talking about a time-series of all published financial data including, for example, the previous 10 years' annual reports and accounts and, particularly, the use of the notes in those reports and accounts, which are often far more significant than the bald figures. From such computations it should also be possible to deduct quite quickly standard business ratios and any unconventional ratios, whether demanded by Ministers or hon. Members.
It is important to emphasise that we are seeking access for hon. Members, through the Secretary of State, to the BSC's work in this area. It is appropriate that when hon. Members have access to the Treasury's macro-economic model, there should be an opportunity, through the Department of Industry, for hon. Members to switch in quite quickly to the key operating ratios of the BSC when we have a debate such as this.
The sort of questions that hon. Members could readily put in such a study would quickly yield answers on, for example, the breakdown of salaries over a certain level. That is a significant figure, as I shall show later. It would also be possible, using a purely historical data base, to look at some simple mathematical extrapolations to try to find pointers for the future.
The significance of this has been brought out time and again. Hon. Members will recall that year after year at around this time the Government propose further take-ups of borrowings well in excess of those that were previously anticipated. This is part of the monitoring that we would seek to do, not just when measures come before the House but through other opportunities when that computer data base was available.
We are not talking of a major systems task. The Select Committee on Nationalised Industries was able, through voluntary help from outside, to put together a data base on the last 10 years' reports and accounts in a matter of six weeks and, through one of the advisers, it was possible to use that data effectively within two weeks. It is worrying that there are those who would turn their face against the extension of computer usage not only for the Department but for the House. It was significant that in its recent study of nationalised industries, NEDO commissioned a paper on the finance of nationalised industries but that none of it was put on computer and is not available on a continuing basis to hon. Members.
The situation in relation to steel is somewhat different because we have the advantage of the data base that the Select Committee made available through its findings. The figures in that study show the value that the House could obtain from the Department of Industry's assessment of the BSC's computer work. The Select Committee study of a 10-year pattern and projections based on historic basis with relatively simple assumptions, taking a fairly optimistic view, consistently gave the Committee the opportunity of seeing an accelerating worsening of the financial position, apparently long ahead of the Department of Industry. That is our immediate and fundamental worry and our reason for proposing New Clause 2. It was because of the Select Committee being alerted in this way, and feeling that its concern was not being shared by the Department, that we had the row earlier this year. We do not seek to rehash that row, but it showed, as I hope the Minister will agree, the value of establishing a data base.
There is another indication of the way in which the data base can be used quite quickly and effectively. It has been demonstrated in the last few days by a former adviser to that Select Committee, Mr. James Taylor, who has been able to take advantage of help offered privately to put together an assessment and data base of recent reports and accounts and to make certain estimates for the future.
The Minister of State will no doubt know about the findings reported in Mr. Taylor's article in The Observer on Sunday. I hope that the right hon.


Gentleman will comment on some of those findings, which are of great significance. I am sure that we all pay tribute to Mr. Taylor's enthusiasm and public spirit in making this information available to the House in time for debates such as this.
The relevance of his recent studies is that he has not only repeated the Select Committee's exercise but has followed the pattern proposed in New Clause No. 2 by taking the last four years of the BSC's reports and accounts and projecting on a range of assumptions to give a 10-year picture. In many ways, his findings are disturbing and The Observer article is one that many hon. Members will wish to read and reread with special care in the light of experience over the coming months.
We suggest three items in New Clause No. 2. It is not an exhaustive list, but they are items that seem, on the basis of Select Committee studies and Mr. Taylor's current studies, to raise matters of particular anxiety.
Stocks have risen substantially during the last four years from £19·7 million in 1974 to a peak of £342 million in 1977. We do not have the latest report and accounts, but we see from the unaudited accounts up to March 1978—and we appreciate the Minister of State making these available to us—that stocks now stand at £143 million.
It might be argued that this shows a welcome reduction of stocks. Obviously at a time of ever-increasing financial crisis for the Corporation, one of the immediate areas in which we would expect to see substantial reductions is the disposal of stocks—money that is tied up. The Corporation has been encouraged to have this money tied up in the past because of the counter-cyclical stocking schemes. The Government's schemes in this respect explain part of the significant rise in stocks, but that goes back to 1976 and it is hard to understand why stocks should still be 70 per cent. higher than they were four years ago—a time of more profitable trading.
On wages and salaries, Mr. Taylor points out in his article that in the three years to March 1977, a period when pay controls were supposed to operate, the number of BSC employees earning more than £10,000 a year rose from 66 to 455,

while the average wage costs increased by 90 per cent. to more than£800 million.
These are substantial increases during a period of wage restraint and massively increasing losses. What assurance can the Minister give that they do not include an element of rip-off—an element of saying "As long as we can go back to the taxpayer for more money, wage increases should press on, irrespective of the way in which our results are worsening"? It is an accepted fact that much of the cash intended for investment is being soaked up in operating costs and the largest part of this goes in wages and salaries. This has led to arguments, which the Government do not accept, about restrictions on the amounts that should be spent in capital expenditure. In thinking about how this figure should be kept updated through the Corporation's computers, it would be helpful to have some idea from the Minister how the figures, which we now know, can possibly be justified. We cannot update these figures to the latest date, because we do not have the latest report and accounts.
On pension liabilities, there is yet another difficulty. We have not been able to get all the information that we sought. However, I express appreciation to the Minister of State for the information that he provided in response to a letter from me. In his reply of 12th June he gave more information about pension fund liabilities. But, in giving that information, he may be as much concerned as I am to recognise that the implications of the inability of which he spoke there to look at the matter on anything other than a triennial basis put us in real difficulty.
Much of our concern in the new clause is to look at the off-balance-sheet liabilities. The main unknown is the pension fund liability. That arises, as is well recognised, from inflation-proofing. Of course, it could change dramatically if there is a change in the relationship between staff and manual schemes—a matter to which the hon. Member for Newcastle upon Tyne, East (Mr. Thomas), whom I am glad to see in his place, has paid particular attention.
Therefore, I should like to ask the Minister of State three questions on pension liabilities. First, does the British Steel Corporation have a pension fund


valuation programme on computer? This is a simple and straightforward subject on which I hope he will be able to give us some information. I shall seek to write to him in more detail on some of these matters, because I accept that he will not be able to give detailed answers today. But the basic question, whether the British Steel Corporation has a pension fund valuation programme on cumputer at present, is one to which I hope he will be able to reply today. Given any kind of annual data, such as we have suggested, it should be possible in a matter of minutes to produce what we are now told is the subject of a three-year actuarial review.
That brings me to my second question. If, as the Minister's letter of 12th June shows, the one year between March 1976 and March 1977 threw up an uncovered liability of £270 million, what is the effect of the rise in unemployment costs from £897 million to £1,075 million in the period 1975–76 to 1977–78? Surely the Minister must agree that, with figures of that kind, a triennial valuation is an archaic actuarial practice in a period of rapid inflation when increases are likely to be in hundreds of millions of pounds.
Thirdly, what would he the uncovered liability in upgrading from the manual scheme to equal the staff superannuation scheme? It seems clear that it is bound to come. Surely it means that on present estimates there would be an increase in total liability to the pension fund of 20 per cent. with a far higher increase in uncovered liability.
Those are three important areas where the data base and the computer analysis would allow the Secretary of State, and thus the House, to monitor past history and current prospects for the BSC.
We must also consider the other information which is called for in New Clauses Nos. 3 and 4. New Clause No. 3 simply seeks to ensure that "Prospects for Steel," which was made available to the House as background for Second Reading, is made available annually on an updated basis. It would also provide Ministers with the opportunity, which I hope they will take today, to return to their undertakings given in Committee.
We need to be clear that there is agreement on the general principle that

"Prospects for Steel" would be a valuable adjunct to the report and accounts and/or to be used at the time of any annual take-up of borrowings. The Opposition are flexible about the date when the publication should be issued, but that it should be updated and published annually seems to us to be of the highest importance.
In Committee, we touched on the question of the way in which "Prospects for Steel" could be beefed up. But our main worry was the speed with which many of the assumptions which it included were being invalidated. For example, there are widely shared worries now about the difficulty of getting agreement on a European pricing scheme for steel, there are suggestions that the BSC may find substantial claims made upon it for anti-dumping in the United States and there are the effects of the strike at Llanwern, to which my hon. Friend the Member for Kingston upon Thames (Mr. Lamont) drew graphic and detailed attention. All these matters must have an immediate effect on many of the assumptions in "Prospects for Steel."
There was also the question of other additional information. In Committee, the hon. Member for Merioneth (Mr. Thomas) sought to gain additional information about the activities of British Steel Corporation Industry Ltd.—an activity to which my hon. Friend the Member for Kingston upon Thames referred.
On top of the other matters which have been raised, I suggest that the sale of redundant plant or joint ventures would be fitting subjects to incorporate in "Prospects for Steel". That document will inevitably allow the Corporation a greater area of editorial assessment of its general situation as opposed to the perhaps stricter legal and accountancy requirements of its report and accounts.
In New Clause No. 2 we seek assurances from the Secretary of State. In New Clause No. 4 we are beginning to look more at what the Corporation can do to reassure the House, though the Secretary of State, on two major areas.
The first is the question of updating the figures for maintaining uneconomic plant. I recall that the Under-Secretary of State gave an assurance that he would give a figure. I appreciate that, through his


right hon. Friend, he has made information available to me showing that the current figure for maintaining uneconomic plant stands at£111 million compared with £65 million, which was the last published figure by the BSC.
This is not an idle, esoteric exercise. It is important to remember that the cost of maintaining uneconomic plant—generally regarded as Beswick plant—has had a direct impact on the Corporation's profitability. If those of us who are from time to time critical of the Corporation or the Department wish to strike a balance, it is essential that we point to the cost imposed on the Corporation by the Government's decisions on the Beswick plant. But the question now is beginning to go even wider. The fear that many of us have—this is where the point of New Clause No. 4 will be immediately apparent—is that what is perhaps economic plant is becoming uneconomic plant over a wider canvas.
To the extent that investment programmes are now being curtailed, one of our fears is that we shall find added to the uneconomic plant list a number of the major projects which we had previously anticipated as having a reasonable pay back. Therefore, I hope that the Government will concede the principle of New Clause No. 4 and will seek to use it in a flexible way to list such plant as is running into financial difficulty.
That brings me back to the now long debated question of post-completion projects appraisals. We have had considerable debate about this matter from time to time. Again, I express appreciation to the Minister of State for sending me a letter yesterday which outlines a number of the factors which are taken into account in post-project appraisals, particularly in the light of experience gained during the last two years.
Before dealing with that matter, I should like to refer briefly to column 83 of the proceedings in Committee. The Minister of State gave three examples of the kind of post-appraisal reviews which the Department was undertaking with the Corporation. He mentioned, first, the preparation of raw material; secondly, steel making; and, thirdly, product finishing. The right hon. gentleman did not spell out which those projects were. I

understand part of his reticence. However, I think that he is a little oversensitive in these matters.
For example, the preparation of raw materials must clearly refer to Redcar. When hon. Members have had the opportunity of visiting Redcar, they have frequently been told that what is happening there is fully in line with anything that is going on in the world, including Japan. Therefore, that must be one of the successful projects to which the Minister of State referred. We would like to hear about some of the successes as well as the problems.
In Committee, the Minister sought to draw a range of findings within his Department in which performance ranged
between an outcome which was very satisfactory and one which showed that considerable improvement could be made."—[Official Report, Standing Committee B, 13th June 1978; c. 83.]
It is on this question of where improvements can be made that the House necessarily feels that it must show a particular interest. Here I refer to the letter of 22nd June in which the Minister of State said:
during the past two years increasing emphasis has been put on … Personal commitment".
That makes sense. To many of us who try to follow these matters there has been a feeling of uncertain personal responsibility over a range of products. The Minister goes on to list a number of main areas in which personal commitment would apply. He refers to increased delegation of authority on project approvals, and projects of up to £2 million, which are now authorised within divisions within specific annual limits. He refers also to personal responsibility of a nominated individual for each project, to consultation with the unions on manning levels and work practices, and to consultations with contractors on the improvement of on-site performances. He expands that list with two short final points and speaks of budgetary control' procedures which have been improved, mainly on the internal rationing of cash allocations to projects and of further development of control systems and procedures.
We are grateful for that information, but it is very general and we cannot leave the subject without reminding the Minister of what we seek in New Clause


No. 4. It has been sought on many occasions. It is some greater feel—and we do not want to put more strongly than that—some balancing of the factors as between inflation, escalation clauses, and scope changes, by which we mean the way in which changes are decided as between the BSC as the customer and the plant manufacturers as suppliers. There is evidence of where the Corporation has from time to time changed its mind at cost to itself and, in effect to the taxpayer. The House should know much more of such matters.
I give one example. Owing to scope changes at Hunterston, special sealed wagons were found at a late stage to be necessary and the cost of the project was increased. We seek to delineate that part of the increases in capital costs in projects which arises from industrial disputes and delays because of labour shortage, and we seek to find out which part of those increases arises from Government action, as we have argued earlier.
In the broader area, too, it would be foolish to suppose that this House or the country could remain unaware of the evidence which arises in the Press and other channels about failures in design and engineering and about failures in project control. There is also, and perhaps this is more critical now, the way in which some projects, having been put torward and committed at low capital cost, become a continuing drain when there are changes in Government policy. Redcar is a good example of where there appears to be a turning back after the expenditure of some £500 million. Further examples are the way in which Ravenscraig has risen in cost between 1972 and this year from £28 million to £243 million. For Scunthorpe, the 1971 estimate of £180 million has now risen to between £500 million and £600 million. At Lackenby the £20 million development on pollution control, to which the Minister of State referred, had to be rebuilt because of a design failure, at a cost of £60 million, in 1977–78. And so one could go on.
The problem that arises in discussing all these examples is simply that they throw very grave doubts on many of the assumptions and conclusions which the Secretary of State put to us in introducing the Bill and which the

Minister of State tended to argue through Committee. Without assurances and agreements to improve reporting systems as outlined in the clauses we have to say that capital budgets and profitability calculations are not credible. The cash flow budget itself becomes doubtful and, as we know from past experience of the BSC's impact on the public sector borrowing requirement, the Treasury's estimate of that figure is not reliable.
Finally, and this is the point which I am sure will ring a bell in the hearts of all hon. Members, Parliament has no way of controlling or even forecasting the cash outflow and commitments covered by measures such as this unless we can have some assurance and unless there can be a greater reliance on the intelligence of hon. Members in discussing this wide range of factors. It is for these reasons that we seek to persuade the Government that the adoption of these new clauses would greatly help that cause.

Mr. Kaufman: I wish the hon. Member for Arundel (Mr. Marshall) many happy returns of the day before yesterday. I always have particular reason to know when his birthday comes round.
The hon. Gentleman has asked me a number of detailed questions. He has sometimes in the past made a practice of writing to me in advance when he has such questions to put. On those occasions I am able to prepare myself adequately to deal with them. On this occasion, if the hon. Gentleman is agreeable, I would much prefer to write to him on the detailed questions rather than seek simply to give him answers on the basis of hurriedly scribbled notes which, apart from anything else, might not be accurately read. I hope that he will agree to that.
I have a comment on one of his points which I make not in any way to denigrate the way in which he approached it, but to show the problem that can arise in trying to deal with these matters. The hon. Gentleman quoted an article from this week's edition of The Observer. He dealt in the serious manner that we would expect of him with some of the matters raised in that article, including the question about wages and pay. But if he refers to the article he will find that the author,


writing about the problem of the rise in salaries and so on, refers to
the last three years to March 1977, during which pay controls were supposed to be in operation".
That is not the situation. The Government's revised pay policy did not begin until July 1975. There was a period from March 1974 until July 1975 when no formal ceilings were in operation. One must therefore take into account that this was a situation in which, for nearly half the period, there was not the kind of pay policy that now exists.
The House is well aware that since July 1975 when the Government introduced the policy in the White Paperv "The Attack on Inflation" the Corporation has observed all of the Government's pay guidance. But the period referred to in the article includes the time when there was no quantified Government guidance on the appropriate level of wages settlements and when wage costs in industry rose substantially.
When the hon. Gentleman asks for information, as he always does—and I do not in any way complain about it—I always do my best to respond. We gave commitments in Committee, all of which either my hon. Friend or I have fulfilled, including an approach I made to the chairman of the Corporation to provide information supplementary to "Prospects for Steel", and that was the burden of one of the letters I wrote to the hon. Gentleman.
Without needing to write anything into the Act—and in some ways it would be inappropriate to do so—I give the hon. Gentleman the assurance that I shall do my best to go on providing a regular flow of information. I very much take the point implicit in his remarks that the information should not need to be assembled only when legislation or a Statutory Instrument is going through the House, and that some kind of more periodic arrangement might be of assistance.
1.0 p.m.
Obviously, in the light of the hon. Member's latest proposal, I should like to discuss that with the Corporation. But there has been a very wide welcome for "Prospects for Steel". When a book gets such good reviews, the author often likes

to bring out supplementary editions. Let us see how we get on with that. I shall do my best to supply any information that I can.
I should like to come to the three new clauses specifically. As regards New Clause No. 2, the Iron and Steel Act 1975 already provides, as the hon. Gentleman will know, for the Secretary of State to obtain from the Corporation such returns, accounts and other information with respect to its property and activities and the property and activities of the publicly-owned companies, as he may from time to time require. The proposed new clause would therefore duplicate existing powers.
Officials of my Department already analyse BSC's management accounts and a computer analysis of BSC's annual reports and accounts for the last five years would not provide a basis for any worthwhile study because they are too general.
As regards New Clause No. 3—we have already discussed this matter both this year and last year; this year, much better than last year, as I think is agreed—the Corporation has responded to the needs of Parliament by providing a prospectus on the Corporation's activities, together with its consolidated accounts in a provisional and unaudited form. I know that that is not as good as the final accounts, but the hon. Gentleman has been good enough to acknowledge that we have done our best to supply this information. I explained in Committee why no cash flow forecast was included, and I have written to hon. Members updating the existing information on the financial controls.
I repeat emphatically that both the Corporation and the Department of Industry are anxious to meet Parliament's proper needs for information. While I am always ready to act as a channel between the hon. Gentleman and the Corporation, if there are any other specific points that he or other hon. Members would like to raise I suggest that they should take up the invitation of the chairman of the Corporation to interested Members to discuss the annual accounts with him and his colleagues on 4th July.
In the light of the Corporation's voluntary provision of detailed information both this year and last, I hope that the hon. Member will agree that it is


unnecessary to place a statutory obligation on it to provide such information in the future. Also, when market conditions become more stable, it will be unnecessary to repeat all the detail given in "Prospects for Steel", since major changes will be infrequent. However, I shall put to the Corporation the hon. Gentleman's suggestion that a more regular and perhaps annual edition of "Prospects for Steel" might be useful.

Mr. Mike Thomas: Did I understand my right hon. Friend to say that in considering the proposal for regularly publishing "Prospects for Steel"—which is a very useful publication—he was considering that future publications should not contain the amount of detail that "Prospects for Steel" contains? I think that many hon. Members would wish that such future publications did contain it.

Mr. Kaufman: I should not like to be categorical about that. I am very much in favour of providing the maximum amount of information. What I was trying to imply—I know that my hon. Friend will accept this—was that as conditions change it may not be necessary for "Prospects for Steel", if it is to be published in the future, to take precisely the same pattern as the current edition. However, I always welcome more information rather than less.

Mr. Mike Thomas: I am sorry to interrupt my right hon. Friend again. Will he confirm that he is aware that two matters are important to hon. Members? The first is that there should be the possibility for the House to judge performance against promise. There is always the temptation on the part of any nationalised industry, when asking for investment money or whatever, to accentuate the positive. That must be discouraged. Secondly, some idea of the assumptions on which the projections are being made should be made clear as well as just the end of the mathematical process. This is extremely important.

Mr. Kaufman: I know the importance that my hon. Friend attaches to that. Apart from anything else, it is very important to make sure that performance is constantly watched. I have been in touch with the chairman of the Corporation and he tells me that the latest

situation of which he is able to tell me is that the Corporation's results for the first two months of the current financial year show some improvement on the annual operating plan projections.
As hon. Members know, it is very difficult to be certain about the way in which the international steel market will move. That makes it extremely hazardous to give any firm indication of what the out-turn for the year would be.
However, with that proviso, it would appear that the Corporation is at present on a course which will at least hold the AOP projection which, in its publication "Prospects for Steel", the Corporation indicated would be a loss of about £400 million, including its usual contingency provision.
The annual accounts for 1977–78 will be published on 4th July. The chairman will then give some indication of the likely result of the first half of the current year. As I have said, I understand that it is the chairman's intention to invite interested Members on that day to discuss the annual accounts with him and his senior colleagues.
My hon. Friend spoke about the importance of measuring performance as against promise. We have made it clear to Sir Charles Villiers that we regard it as a matter of prime importance that the Corporation should make every effort to improve on performance levels provided for in this year's AOP. I had better add, so that the House is aware of the gravity of the situation, if it was not aware of it before, that when I further questioned Sir Charles about this matter yesterday, what he said—I quote his words precisely—was:
Nothing has got better and one or two assumptions connected with the market look to have got worse.
So I think that I had better put that on record. I am grateful to my hon. Friend for enabling me, through one of his well-judged interventions, to do that.
I come now to New Clause No. 4. My Department does not carry out post-completion project appraisals although, as has been explained elsewhere, from time to time it studies the project appraisals carried out by BSC. Naming the appraisals carried out and providing individual details of loss-making plant would, I feel, lead us into the discussion


of issues which are properly the sphere of BSC's management.
As I explained in Committee, my Department has discussed three appraisal reviews with officials covering three particular aspects of BSC's activities. Hon. Members will be aware that the Corporation has been very successful in bringing projects into commission on or before time. The Scunthorpe rod mill was built to programme, and Thrybergh bar mill, which aimed to achieve a production figure of 8,000 tonnes a week after 100 weeks, achieved this result in its 46th week. The projects studied by my Department covered performance ranging from "satisfactory" to "showing scope for considerable improvement". Instances emerged of under cost estimating, design problems leading to plant not performing to intentions and major changes in a project's scope. The Corporation is constantly trying to improve its procedures to reduce the possibility of recurrence of these problems. Hon. Members might also like to know that all cost overruns come up for reauthorisation, and where the scope of a project is changed the project is re-evaluated.
Although in the past scope changes have caused project costs to increase over original budgets, improved planning processes have largely eliminated this sort of increase.
I have sought to deal in some detail with the substance of the new clauses. I have noted very carefully the points that have been made. I know that the hon. Member has not himself felt, on this or any other proposals that he and his colleagues have framed with great skill and ingenuity in order to allow us to have debates, that he wanted to insert them into the Bill. We shall consider where it is possible to assist. Where it is possible and appropriate, we shall do so. I hope that the hon. Member will not feel it necessary to press the new clauses.

Mr. Michael Marshall: By leave of the House, in order to make progress, since the Minister has said that he will write to hon. Members on these matters, it might be helpful to put to him two or three other short points which arose from his speech and which might have come up if we had debated Third Reading.
The basic question is the problem of the Corporation as it stands today. The Minister quoted the work of Mr. Taylor, of which I do not defend chapter and verse. However, the burden of Mr. Taylor's argument was that the Government's suggestion of a future financial reconstruction meant, first of all, that dividends on £1·5 billion would be payable only after a financial reconstruction which had no terminal date and which apparently had no sanctions in the event of failure to reach an agreed date. In other words, all that the Bill offers at present is a return on the £1·5 billion on the never-never.
Secondly, financial reconstruction—I hope that the right hon. Gentleman will be able to assure us about this, if necessary through correspondence—clearly means that the debt will be written off. At present, that means that the money which the taxpayer is asked to provide under the Bill is to be advanced with the declared intention of not paying it back.
If we simply ask for the overall financial situation, we must remind ourselves how, year after year, in June or July, we find that forecasts are well adrift. Mr. Taylor's point was that two years ago the chairman of the BSC forecast that the House would not be required to increase borrowings until 1979–80. Yet, despite a vastly reduced capital expenditure programme, there is a shortfall in internally generated funds—that is, cutbacks in excess of £1,200 million—of about £400 million. In other words, that is a net failure of estimates of £1,600 million in two years. That is an alarming figure. It is one that the Minister has argued in the past is related to changes in the market, but I fear that that is not an argument that he has been able to sustain in our debates on the new clauses.
I hope that the Minister and his hon. Friend will turn their attention to the real implications of the BSC's own flexibility as a monopoly which should be able to thrive better than its competitors in a declining market. It should be able, above all, to see some restoration in the severe loss of its domestic market, particularly from British Leyland and Ford, which take half their steel requirements from the BSC and would probably take 80 to 90 per cent. if it were available at the right quality and at the right price.
On our worries about internal managerial and project controls, we have raised a number of points which the Minister has said he will consider further and which are the summation of three years' pressing for information. Little by little the Select Committee and through the Minister of State and his hon. Friend we have received some additional information. I pay my tribute to those who have made that information possible. I recognise the load which has fallen on the Minister's officials in helping him to give his replies to the House.
The matter is grave and urgent. Three years ago, the Minister told us that he thought that the good times were just around the corner. He has had a difficult ride on the question whether he misled the House. I take the view that perhaps he misled himself. There were some difficulties a year ago. The assessment that we then made was particularly difficult, but the difficulty was based partly on the failure of internal communications. This time we are asked to wait and see. We are willing to do so, but we shall watch with ever-increasing vigilance.

Question put and negatived.

Bill read the Third time and passed.

EUROPEAN COMMUNITY (FOUNDATION AND CULTURAL SECTOR)

1.14 p.m.

The Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. John Tomlinson): I beg to move,
That this House takes note of EEC Documents Nos. COM(77)600, R/325/78, R/734/78, R/774/78 and R/2982/77 on the European Foundation and Cultural Sector.
Today, we debate five documents covering two subjects—the European Community action in the cultural sector. At its meeting on 26th April, the House of Commons Scrutiny Committee recommended a debate on the five documents since they raised questions of legal and political importance. It is also a fact that Early-Day Motion No. 108 on the European Foundation demonstrated the views of hon. Members when it attracted 320 signatures.

Mr. Nigel Spearing: Will the Minister give way?

Mr. Deputy Speaker (Sir Myer Galpern): Order. The Minister has said only a few words and already an hon. Member wants to intervene.

Mr. Spearing: I was hoping to save the time of the House at a later stage, Mr. Deputy Speaker.

Mr. Deputy Speaker: Oh, good.

Mr. Spearing: In respect of that Early-Day Motion, is my hon. Friend satisfied that its terms accurately reflect the central objectives of this Foundation?

Mr. Tomlinson: That is rather premature, as the Foundation has no objectives at all—

Mr. Spearing: Oh.

Mr. Tomlinson: There might be proposals of objective, but as there are no objectives for the European Foundation yet, it would be premature to speculate on them.

Mr. Spearing: Then we should not have signed it, should we?

Mr. Tomlinson: We have not signed anything in relation to a European Foundation. Perhaps it will be more appropriate to develop the argument and


to listen to my hon. Friend later. Otherwise, this will clash with something that I intend to say later.
I propose to deal first with the background of the present stage of discussions reached on the Foundation. I shall then turn to the developments leading up to the production of the Commission's communication on action in the cultural sector, concluding with some remarks about certain aspects of the cultural sector proposals which are of more direct concern to the Foreign and Commonwealth Office, leaving the Minister of State, Department of Education and Science, to comment more fully on the Foundation and other aspects of the cultural sector document.
The first four documents, which set out the background to the Foundation, are amplified by the Explanatory Memorandum of 3rd March 1978 and the Updating Memoranda of 3rd April and 12th June, submitted by the Secretary of State for Education and Science, copies of which have been made available.
The Government are committed only to the principle of establishing a European Foundation. And to the fact that it will be in Paris. We are committed to no more than that. The scope of the Foundation's activities and its structure are still very much matters for discussion and the purpose of today's debate is to give hon. Members a chance to let us hear their views.
In the discussions in Brussels among officials, we have made plain our wish to have a Foundation which is modest in size, with strictly defined objectives, whose finances are subject to the maximum control by member States—that is to say, that Community expenditure should be obligatory.

Mr. Spearing: This is most important. My hon. Friend has just said that the Foundation has strictly defined objectives. I think that Hansard will show that earlier he told me that it had no objectives yet. Can he clarify that?

Mr. Tomlinson: My hon. Friend is having a problem of tense. I said that at present the Foundation has no objectives. What I have just been trying to point out is what our objectives are. At present, we are committed to nothing more than that there shall be a European

Foundation and that it shall be in Paris. That is the limit of our commitment. What I am saying is that, in the discussions, those are our objectives—modesty of size, strict definition of purpose and maximum control by member States. I was going on to say that by that I mean that the Community expenditure should be obligatory.
We shall insist on adequate provision for audit to ensure not only that moneys spent are fully accounted for but that the expenditure has been directed entirely to the limited range of agreed programmes and activities.
We are also concerned to ensure that the Foundation should be organised so as to avoid duplication with other institutions working in the same area, and oriented so as to co-operate effectively with those institutions. The proposals for Community action in the cultural sector do not spring from any new or recent thinking. Such ideas were in evidence well before British accession to the European Communities.
In April this year the Commission Communication was submitted to the House under an Explanatory Memorandum jointly presented by the Department of Education and Science and the Foreign and Commonwealth Office. Under the normal procedures the Communication has been referred from the Council of Ministers to the Assembly and to the Economic and Social Committee. As yet we do not have the opinion of either of these bodies. Officials here have examined the Commission's proposals and on 7th June gave evidence before a Committee of the other place. The evidence taken has not yet been made available but I would like, against that background, to make the Government's position clear.
The Community enjoys no automatic competence in the cultural sector under the provisions of the Treaty of Rome. It would not be in the interests of member States to seek to establish any such united policy. The set of proposals covers a wide range of subjects straddling the areas of responsibility of several Government Departments. Most of the ideas in Part I of the Communication attempt to add a cultural dimension to possible areas of action being considered in other forms, for example, freedom of trade, mobility


of labour, rights of establishment, taxation and so on. These proposals have to be viewed on their individual merits and in many instances we are not convinced that there is much that is feasible.
Certain items in Part II are already in operation, such as scholarships, assistance to the Nuclear Research Institute at Grenoble for research into methods of conserving items of cultural importance, help for museums and so on. Other topics are so vaguely formulated that they hardly represent proposals. However, the general thrust represents a response to a feeling of need for enhanced co-ordination of activities in the cultural area on a pragmatic basis.
In principle the Government would be ready to discuss with their Community partners specific proposals as the occasion arises and in other institutional frameworks, such as the Council of Europe and UNESCO. It is not the Government's intention to accept the totality of these proposals, which we believe are varied in their degree of merit. In particular, the Government would strongly resist any attempt to impose yet another level of bureaucracy in an area in which the Community does not already enjoy competence.
Having said that, I draw attention to the draft resolution at the end of Document R/2987/77. This resolution essentially poses to member States Governments, including Her Majesty's Government, the question whether these proposals are desired. I hope that this debate will help to clarify the view of the House on this issue.
I understand that some of my right hon. and hon. Friends see in these proposals the threat of creeping federalism. I re-emphasise to them that neither the Government nor, I believe, the official Opposition—and certainly not the Labour Party or me—espouse the cause of federalism. I am as opposed to the concept of federalism as many of my right hon. and hon. Friends who have regularly expressed their fears in this House. I stress to them what the Prime Minister said in his letter to Mr. Ron Hayward, General Secretary of the Labour Party. He said quite clearly:
The Government has never accepted that the Community should develop into a federation. It is our policy to continue to uphold the rights of national Governments and Parlia-

ments. We do not envisage any significant increase in the powers of the European Parliament.
My right hon. Friend went on to utter the words which my hon. Friends will know as well as I do in relation to the powers of the European Assembly.
What was said in the context of the Assembly applies even more widely to the general principle of federalism in Europe. I hope that my right hon. and hon. Friends will be reassured that the Government will take as staunch a view in the future in opposing anything that we consider to be a move towards federalism as we have done in the past.
There are five documents involved. There has not yet been any decision reached in relation to the European Foundation other than that, as I explained, we support the creation of a European Foundation and accept that it should be located in Paris.

Mr. John Lee: What some of us would like to know is whether this Foundation is to be the vehicle for pro-Market propaganda, something which may be of considerable importance in the year when there may be what some people like to call Euro-elections.

Mr. Tomlinson: I can readily assure my hon. Friend that we have no intention of allowing that to happen. I do not think that the risk is real, but what I have said about the strict definition of objectives, the modesty of the fund and the operation of the audit—all of which we shall want to see as an integral part of the Foundation—shows that there is no possibility of such fears being realised.
We have expressed our agreement in principle to the establishment of the Foundation and put forward our scepticism about the need to extend Community competence.

1.27 p.m.

Mr. Geoffrey Rippon: I would not wish to follow the Minister into any discussion of federalism or the internal correspondence of the Labour Party. My view is that we must create European unity step by step and with realism. The proposal for the European Foundation is such a sensible and realistic step.
I begin by congratulating the Government on their success so far in carrying


out the wishes of the House with regard to the establishment of the European Foundation on the lines now proposed. This is a good example of what the House can achieve if it takes the initiative and seeks to create policies rather than merely react to them. Until this House expressed its view the Tindemans proposals had been quietly laid on one side. The House will recall that in February 1977 324 hon. Members—an absolute majority—drawn from all parts of the House signed the Early-Day Motion tabled in my name and in the names of right hon. and hon. Members representing all political parties.
That motion urged the Government:
to take the initiative in the Council of Ministers of the European Community with a view to marking the 20th anniversary on 25th March of the signing of the Treaty of Rome by launching a European Foundation on the lines recommended in Mr. Tindemans' Report, to be financed partly by grants from the member States and partly from private funds, with the aim of promoting, either directly or by assisting other bodies, any measures which will help towards greater understanding of European aims but placing the emphasis on human contact such as youth activities, university exchanges and town twinnings.
In the event the European Council, on the initiative of the United Kingdom—because we were in the Chair at the time—in Rome on 26th March 1977 took the necessary first steps by asking the Commission to draw up a report for presentation at its December meeting. This was done in the way the documents before us explain.
The decision in principle having been duly taken last December, we have now reached the stage where in Copenhagen, on 7th and 8th April, the Heads of State and of Government laid down, as they said in their communiqué, the scope of the objectives of the Foundation and agreed on the framework for the structure and the financing. They decided that the seat of the Foundation should be, I suggest suitably, in Paris. There is a broad framework and there is agreement between the Heads of Government on the scope of the objectives and on the framework for the structure and the financing.
All that now remains is to conclude the formal discussion, in the words of the Copenhagen communiqué, "as soon as possible". I trust that that will be done within a few weeks. I am glad

that the emphasis has been placed, in dealing with the scope and objectives of the Foundation, on ensuring that the activities will be complementary to those of existing organisations. It will act as a catalyst with the aim of buttressing but in no way supplanting efforts which are already going on.
Specific reference has been made, rightly, to the need to collaborate with the European Cultural Foundation in Amsterdam and with the Council of Europe. That Foundation is an international non-governmental organisation, which devotes most of its income to the promotion of cultural, scientific and educational activities. It already has an agreement with the Council of Europe which ensures excellent relations.
The sort of other existing organisation which might look to the Foundation for assistance include, for example, the Council of European Municipalities and the International Union of Local Authorities, which are much concerned with town-twinning and youth exchanges. Another example which would deserve assistance is Europa Nostra, which is concerned with the protection of our European architectural heritage, or the European Youth Orchestra, or the European Choir. These and similar bodies, as I see it, will continue to be completely independent and responsible for formulating their own programmes. Where appropriate, they will all receive additional support and finance from the new Foundation.
It should be made clear that existing independent organisations will still need to raise funds from private sources. I think that that is essential, since the Foundation will only rarely, I understand, engage in direct activities and will be mostly concerned with helping those who help themselves. So, as the Minister said, the Foundation will not need to have any elaborate structure or incur any large administrative cost.
The prime objective is to expand the scale of voluntary work, particularly in cultural and educational exchanges, all of which are at present gravely restricted by lack of sufficient funds. I hope that the financing of the Foundation will be agreed without delay. The basic proposals have already been formulated. What is required is an initial endowment and annual contributions which can be financed partly from Government funds


—that is right, since it should be an intergovernmental rather than a Community organisation—and partly from a contribution in any event from the Community budget. That can be supplemented by private sources, particularly if we can ensure that those who contribute to the Foundation will have the tax advantages that normally apply in member States.

Mr. Tom Litterick: I was interested to hear the right hon. and learned Gentleman's remark to the effect that the voluntary bodies would remain independent. He went on to say that those bodies are already severely handicapped by lack of funds. Can he tell us how these bodies will be more benefited by getting the British taxpayer's money through a European body than they would by getting it directly?

Mr. Rippon: I have no objection to their getting both. When I was a Minister at the Foreign Office, I played some part in establishing funds to support our British organisation. I thought that that was a good thing. It may well be that it could be revived. But since most of these organisations are on a European basis and produce European programmes, it seems appropriate that they would be financed through a European Foundation. What needs to be supplied is the precise amount of initial endowment and the scale of the assured annual income.
Whatever formula is agreed, I would have thought that the total amounts involved are hardly likely to be a matter of great concern to the Treasuries of the nine member States. The suggested contribution from the Community budget of five million units of account in the first year, 10 million in the second year and about 20 million thereafter does not seem to me to be excessive.
Whatever differing views there may be in this House about the economic issues that arise from time to time in relation to our membership of the EEC, I hope that we have—indeed, the Early-Day Motion suggests that we have—a very wide measure of agreement on the desirability of bringing the peoples of Europe closer together and creating a wider knowledge and understanding of our European civilisation and heritage. That is why I think it important that the Heads

of Government have envisaged that although this should be financed by the nine member nations, its activities will not in any way be restricted and there will be possibilities of ensuring the greatest measure of co-operation with the Council of Europe and its member States.
Of course, there may he more room for controversy about some of the detailed recommendations in the Commission's proposals as set out in Document R/2982/77, such as the harmonisation of value added tax on works of art. While it may be convenient for that document to be debated together with the subject of the European Foundation, the proposals in it are quite separate and distinct. They raise a whole number of separate issues, and it would be a pity if we confused the two matters. They carry no legislative effect, and the draft resolution to which the Minister referred, which in any event is not binding on member States, is in very general terms.
As the Select Committee points out, some of the measures proposed are already covered by existing Community legislation. Some, such as, for example, the recommendation to all member States to ratify the Council of Europe's Convention on the Protection of the Architectural Heritage, we have already implemented—in that case as long ago as 1972. As for the rest, where they require legislation or involve additional expenditure, they will all go before the European Parliament and other institutions, and in due course before the Select Committee in the usual way, and they can be considered on their individual merits which, I am inclined to agree, vary from case to case.
What I think should be welcomed in relation to this document, as in relation to the proposals for the European Foundation, is that this is further evidence that the Commission and the Council of Ministers are fully seized of the importance and the relevance of stronger action to preserve our European architectural and cultural heritage and to develop cultural, educational and other human contacts on a much broader basis than we have hitherto been able to achieve.

1.38 p.m.

Mr. John Roper: This debate, as the right hon. and learned


Member for Hexham (Mr. Rippon) has said, covers two matters which are somewhat distinct. While, unlike some of my hon. Friends, I welcome the proposal for a European Cultural Foundation—and one congratulates the right hon. and learned Gentleman on his initiative there—I have many more reservations on the development on the cultural sector.
In that respect I should declare an interest as vice-chairman of the Committee on Culture and Education of the Consultative Assembly of the Council of Europe. I have perhaps an interest particularly if it is thought that this document is in any way a threat to the valuable work undertaken over a number of years within the Council of Europe and, in particular, within the Council on Cultural Co-operation, which goes wider than the 20 countries of the Council of Europe and also involves Finland and the Holy See, and has been meeting in Strasbourg this week.
Before coming to the role of the Council of Europe, I should say something on the proposal for the Foundation. Even with the most recent additional memorandum from my right hon. Friend the Secretary of State for Education and Science, I am still a little confused as to whether this will be a Community institution or another governmental body. It seems to be something of a hybrid. Perhaps my hon. Friend the Minister of State, Department of Education and Science can say a little more about its status.
I hope that Annex II to the most recent proposals that went to the Council, referring to the Council of Europe, will be applied. When we are considering the cultural dimensions of Europe it is important to see Europe on as wide a basis as possible. The countries of the Nine, as they are now, and the Twelve, as they may well become, represent the majority of the population of Europe, but we must remember that valuable contributions to our common culture are developing in countries outside the Nine, and indeed outside the Twelve.
One has only to think, for example, of the tiny country of Iceland, which preserves within its culture one of the important sources of the whole of European culture. I could give examples of many other countries which are not, and

do not intend to become, members of the European Community and which should be involved in this work.
I was reassured by many of the remarks made by my hon. Friend the Minister about the document on the cultural sector. However, I must admit that it is not the threat of creeping federalism that makes me uneasy. Indeed, if someone could put forward some sensible policies for federalism, which has not been done yet, I should be prepared to consider them on their merits. What I am concerned about is creeping bureaucracy. This document could represent a risk of creeping bureaucracy in Brussels and duplication of bureaucracy there on matters which can be done already. I hope to examine and outline why that is so.
It seems to me that cultural policies are inherently national, or perhaps not even national. Within the United Kingdom we rightly allow cultural policy to be dealt with as appropriate in different parts of the country, because of the different cultures which co-exist within one united kingdom. Certainly at one level it is a problem for national or sub-national policies within member States, but it must also be considered at the widest possible European level.
I am therefore somewhat sceptical about the view adumbrated in the document that the level of the Nine is an appropriate level at which to co-ordinate and develop cultural policy. The level of the individual country and, as appropriate, the level of the Council of Europe, representing as widely as possible the cultural interests of Western Europe as a whole, seem to me very sensible levels for discussions and consideration. But I am not persuaded that the level of the Nine is appropriate on a number of the matters covered in the document.
As my hon. Friend the Minister said, the first part of the document really applies what one might describe as the economic aspect of the Treaty of Rome to the cultural field, where the Nine have a role. When we consider freedom of trade, we are clearly operating within the economic community and the cultural dimension of that community is an appropriate area for community action.
Similarly, it is sensible to consider the freedom of trade in cultural goods or of


movement and establishment of those who work in cultural industries, in the same way as we view the freedom of movement of doctors, dentists or anyone else, at a Community level. That possibly also applies to questions of harmonisation of taxation and legislation in the cultural sector, although I am not persuaded that it is necessarily a good idea for us automatically to adopt the scheme of public lending rights which commends itself to the Federal Republic of Germany. It seems to me that even within these areas of cultural legislation the Community has not reached a state in which it is by any means necessarily desirable to have the same forms of legislation on matters such as public lending rights throughout the Community. That is so paticularly as, given the differences in languages, there is not a great deal of borrowing of French, German or Italian books from British public libraries and vice versa. Therefore, that aspect will require a great deal of further attention.
But it is really with the second part of the document that I concern myself. We must begin by looking at the curious resolution at the end of Document R /2982/77, in Annex II. I refer to the last three clauses. If ever there were a blank cheque that the Council was asked to endorse, this is it. The first paragraph of the resolution says:
Community action in the cultural sector shall he implemented on the basis of the guidelines laid down in the Commission Communication.
If the Council adopts that resolution, it is buying the whole document—I shall later point out some of the interesting matters it contains—hook, line and sinker. It is an extraordinary resolution, which I trust British Ministers will examine carefully and resist. No hon. Member would support acceptance of the document hook, line and sinker.
I turn to the individual proposals. I should perhaps begin by saying that the document is written in a lyrical style which does not always come out of Government communications, and particularly Community communications. That is one aspect of it which is rather welcome. My hon. Friend the Member for Putney (Mr. Jenkins) will no doubt have read the section on museums, which compares them with icebergs and refers to the "dusty jumbles of yesteryear". That

displays a tine style, but not necessarily one that we should want to have in a document to constitute the guidelines for the future of the Community's policy. Nevertheless, I am pleased to know that lurking somewhere in the Berlaymont is a man with a romantic imagination who was able to dream up this document. He is certainly an optimist.
I come to a rather more significant matter. On pages 3 and 4 there is an attempt by the author to deal with the problem of duplication with the Council of Europe. Clearly fearing attacks such as I am making, the writer says at the bottom of page 3:
Far from duplicating the Council of Europe's own programme, Community action in the cultural sector provides the starting point for a combined advance…it is easy to determine what each can best achieve and to make optimum use of this division of labour on both sides.
He is certainly an optimist.
The writer explains how the division of labour shall fall. At the top of page 4 he lays down that it is the task of the Council of Europe to think and of the Community to do or, to use his words,
it is undeniably the task of the Council of Europe to continue its high-level, fundamental research on culture itself…which enables it to update and adapt basic concepts—cultural democracy, socio-cultural leadership, or integrated conservation—to the changes taking place in society.
I shall not ask whether the House would be glad to have those concepts updated—they do not come into our everyday parlance—but there may be those who would like to have them updated. That is the role of the Council of Europe—to update these somewhat vague concepts.
In the next paragraph we are told that the Community's task is
to move on to practical measures".
We have a division of labour easily throughout, with people in Stratsbourg thinking of vague concepts and updating them and other people doing things in Brussels.
That is what is pernicious abour the document as a whole. If there is to be collaboration, it should be at the level of the Council of Europe, involving all 20 countries and not merely those which happen to have joined together in an economic community.
There is in the whole document, under each category, the danger that exists in any bureaucracy of building up a rival machine, a new machinery in Brussels, no doubt providing well-paid and fascinating jobs for more civil servants of the Community, able to write prose just as lyrical as that in the document, but I believe duplicating work which is being done in Strasbourg and which should be done more effectively there through the provision of more resources and perhaps more qualified people. I find it particularly arrogant that the author, when explaining the objectives of the measure, says on page 3 of Annex I:
It stands to reason that activities concerning the development of cultural exchanges must be carried out at Community rather than national level.
When I read something telling me that "it stands to reason", but without giving any reasons, I become very sceptical of the rational basis on which this has been developed. Again, that typifies the approach of this document, which is unsatisfactory, vague and will set back the cause of Community co-operation if it is pursued without proper definition and clarification.
I believe that there is room for useful co-operation within the Community on these matters which are closely linked to the Treaty of Rome and on those matters which are economic. But, in the wider sense, it is essential that we should pursue cultural co-operation at the widest level in Europe, and that is at the level of the Council of Europe.

1.52 p.m.

Mr. Patrick Cormack: I should like to associate myself closely with many of the remarks made by the hon. Member for Farnworth (Mr. Roper). He sensibly divided these two documents, and rightly gave praise to one and some severe and well-merited criticisms to the other.
I certainly welcome the Foundation, which has now been agreed upon. For the life of me, I cannot understand why people feel so apprehensive about it. It seems to me that co-ordination of this sort is one of the things which is most needed in Europe, and which is least offensive, even to those who have reservations about other areas of co-operation. I hope that the Foundation will be

quickly established. I think that it could do a great deal of good in a modest way. I do not think that anyone could suggest that it will be a vehicle for creeping federalism.

Mr. Roger Moate: Wait.

Mr. Cormack: I shall indeed wait, as my hon. Friend says. As I wait I shall get impatient, because I want the Foundation to be established. I believe that it will contribute much good.

Mr. Moate: I was suggesting that my hon. Friend should wait for someone to suggest this, because someone will very shortly if he manages to catch Mr. Speaker's eye.

Mr. Cormack: Well, it is always better to anticipate than to react. Knowing that my hon. Friend is sitting here bubbling with indignation about this entirely unexceptionable and admirable project, I thought that I would just provoke him a little.
As I say, this is an admirable project. It is something which is needed. I cannot see that it will do any harm. I hope that it will do a lot of good. I think that we do need a cultural catalyst and a greater understanding of our common heritage and of our common cultural problems. One of the things that I have found in recent years is the lack of knowledge which exists in member countries of our respective systems for preservation and conservation. If the Foundation can help to make us more aware of how we care in individual countries, it will be doing a great deal in that sphere alone.
My right hon. and learned Friend the Member for Hexham (Mr. Rippon), to whom much credit is due for this particular concept, referred to helping such worthy schemes as youth orchestras and choirs. I hope that it will go much further than that. For instance, I hope the Foundation will consider a code of protection for our heritage in Europe. That seems to be an appropriate task for such a Foundation. Many of the things that are badly dealt with in the second document could be properly given to the Foundation to study in depth so that it could produce a decent paper.

Mr. Rippon: As I see it, the purpose of the Foundation would not be to conduct such a study itself but, for example,


to give funds to Europa Nostra, and similar organisations, to conduct such a study themselves and then publish the result.

Mr. Cormack: Yes, indeed, but the Foundation could have a co-ordinating function and could inspire proper studies. I am grateful to my right hon. and learned Friend for what he has just said. I do believe that we have real cause for apprehension and criticism in respect of the second document. I liked the references of the hon. Member for Famworth to the prose in which it is written. It is nice to have something which is colourful, but none the less this document is bureaucratic and threatening, despite the colour.
I should like to single out a few things of which we should be extremely wary. I was glad that when the Minister spoke he damned it with faint praise. The suggestions on VAT are quite unnecessary and would be wholly disadvantageous to this country as the centre of the world's art market and everything else. We devised an admirable scheme for VAT on works of art. Many of us did not want VAT on works of art at all, but in true British style a compromise solution was reached during the period of the previous Administration and it is working reasonably well. It is far better than the nonsensical uniformity proposed in this document. I hope that no British Government would ever countenance a move in the direction of the flat 30 per cent. of selling price which is here suggested.
It seems to me that it is perfectly reasonable that we should have common codes and practices with regard to combating thefts. That is fine. No one will object to freedom of trade in cultural goods. As has been said from both sides of the House, in many cases this is a rehearsal of what already exists, and has existed, for many years. However, as I see it, it is not the business of the Community to deal with matters such as the harmonisation of laws on copyright and public lending right. The problems are different in different countries. I am one of those who has always advocated PLR, and will continue to do so until it is on the statute book of this country. But I do not think it would be easy, or necessarily desirable, to have the same system throughout the Community.
However, there are other matters in which it is quite right that the Community should interest itself. I should like to see a high level of efficiency and proficiency in restoring. When one looks at the problems which the European heritage faces, and many of the difficulties encountered by those seeking to maintain our cultural heritage, one sees that in many countries of the Community there are not sufficient trained and equipped restorers. Although there is now a better interchange of information—one can cite the wonderful contribution of the V and A people to "Venice in Peril"—nevertheless, moves on this front are wholly to be desired. Anything which can be done within the Community to coordinate and raise standards will certainly have my support.
I should like to draw attention to something which has not yet been mentioned. It is contained in the memorandum submitted by the Minister of State for Foreign and Commonwealth Affairs and by Lord Donaldson, the Minister for the Arts. The penultimate paragraph of that memorandum contains some words which I find deeply disturbing. It states:
Some of the recommendations in the Commission communication could, if implemented, result in significant additional expenditure being charged to the Community budget. Expenditure on cultural activities is classified as non-obligatory expenditure.".
Yes, a statement of fact, but it would seem to me eminently desirable that expenditure on these matters should become obligatory expenditure throughout the Community. Therefore, I welcome the fact that there is a Community interest, and I hope that there will be a prodding from Brussels so that we can have in every Community country a higher degree of priority awarded to culture, the heritage and the arts.
When one considers the vast sums of money that are passed with nothing more than a shrug, a nod or a wink, but that when it comes to a matter of cultural or heritage importance a small sum is suddenly regarded as an enormous one, it is quite ludicrous. With leadership from the Community, I hope that through the Community we can attach a higher degree of priority to these matters.
Recently, a Select Committee of this House presented an admirable report on the National Land Fund. With some of


our Community partners, I hope that before long we shall be able to establish the equivalent of a Community heritage contingency fund. It is needed. It could be provided at very little cost but with enormous benefit to all the peoples of the Community. This is an area where the peoples of the Community can be served in a way that perhaps they cannot in other areas.
I welcome the establishment of the Foundation. I hope that it will soon be doing good work and that it will soon become a valued part of the European heritage and cultural scene.
I welcome this other document in as much as it shows that there is a higher degree of priority being awarded to these matters than was the case formerly. I criticise many of its contents. I am opposed to some of its suggestions. But I hope that from it we can have a continuing debate on these matters and that our common heritage will become increasingly the concern of those who sit here and those who will sit in the first directly-elected Parliament in Europe.

2.1 p.m.

Mr. Hugh Jenkins: I question the desirability of holding this debate today. In the first instance, we have had very little time to study these extremely complex documents. At first glance, I had an entirely wrong idea about the purpose of the two documents, until I studied them both in detail. It was only on closer study that I realised that my objections to one of them were much greater than my objections to the other.
I thought at first glance that the European Foundation was a harmless cultural body. Instead, it is a sinister body for the purpose of promoting a federal Europe. I thought that the other document was putting forward proposals which were intended to have a practical effect in a fairly short time in this country. But I find on closer examination that the other document is the lesser of the two, although it contains a rather curious resolution at the end, and does not seem to be as wicked as I thought it was. Indeed, I find many of its contents quite admirable. In other words, it is a curate's egg.

Mr. Roper: Which one?

Mr. Jenkins: It is curious that on a Friday we are presented with two documents which are entirely dissimilar in character. We are debating them when there are relatively few of us in the Chamber and apparently, at the end of the day, we shall take a decision which may have important implications. On the one hand, the Minister tells us that it really does not matter very much what we do and that this is really a little private chat amongst ourselves because nothing much will happen. On the other hand, the right hon. and learned Member for Hexham (Mr. Rippon) tells us that this is an important and rather earthshaking occasion and that we are deciding some very serious matters.

Mr. Spearing: It is a typical EEC mess.

Mr. Jenkins: Where precisely are we? I think that we are in the position that we ought not to be having this debate on a Friday at all. We ought to have it in two or three weeks, after we have had an opportunity to study the documents through our respective organisations. Both sides of the House have sub-committees which specialise in and study these matters. They have not had sufficient time to study the documents or to make recommendations to us. Therefore, we come to discuss complex and difficult documents unprepared, and the Government seem to want us to say "It does not very much matter. Let the documents go through. Nothing much will happen."
I am inclined to think that something will happen and, for that reason, since I wish to make my protest known, I say here and now that because I think that this debate ought not to be taking place today, if any other hon. Member decides that he would like to demonstrate his distaste for this procedure by dividing the House at the end of the debate, I shall accompany him in that decision.

Mr. Rippon: In making his remarks about taking these matters together, has the hon. Member borne in mind that that was the recommendation by the Select Committee as long ago as 26th April? In view of that, does he not agree that it might be right of the Government to ensure that the Select Committee is a little more careful in the way in which it brings these matters before us?

Mr. Jenkins: I am the last person to criticise the Select Committee. I have no doubt that it had its reasons for doing this. However, the access to the documents of those hon. Members who do not serve on the Select Committee was too recent to enable them to form a considered view. The right hon. and learned Member for Hexham is right in the middle of this subject and has been throughout. In fact, his name is mentioned in one of the documents. But there are those of us who have other preoccupations. We have not followed the whole matter through and, therefore, we do not come here today having watched its progress almost as though it was our own child. I am sure that the right hon. and learned Gentleman would not disown an element of parentage.
Those of us who are not in that position are required to drag ourselves away from our other concerns and, on a Friday, in a very thinly attended House, reach a decision which the right hon. and learned Member says is of considerable importance and which the Minister suggests is not quite as important as the right hon. and learned Gentleman says it is. I hope that my hon. Friend is right and that the right hon. and learned Gentleman is wrong. It would be in accordance with precedent if it proved to be so. That is usually the case. But I have doubt about the papers, and I turn first to the one which at first glance I thought was a pretty harmless idea; to establish a European Foundation.
The first feature that I find objectionable is that the document is totally inaccurate from start to finish in its misuse of the word "European". It does not mean European at all. It means the EEC. There are some 32 nations in Europe. The document refers to some nine nations—possibly 12 in due course—in Western Europe. So it is pernicious because the use of the word "European" in this sense leads to confusion in the mind of anyone seeking to discover what the document is about. It talks in the first paragraph of strengthening understanding of and support for the work of the Community. There we know what we are about. This is a propagandist document intended to strengthen the whole idea of the EEC and to pave the way towards the establishment of a federal Europe. I am sure that the right hon.

and learned Member for Hexham will not deny that there is an element of that in it.

Mr. Spearing: It is the basis of it.

Mr. Jenkins: It goes on to talk of projecting the Community to the world. This is a blatant propagandist objective.
Then we move to other matters and begin to talk about the greater awareness of European civilisation. The nations which make up the EEC are very important. They are nations with great histories and tremendous contributions to European culture. But even the most committed European would hardly dare suggest that they have a monopoly of European civilisation. Civilisation is not located only among the Nine. There are other nations of Europe which have made a profound contribution to European civilisation. The appropriation of European civilisation to this rump of Western Europe in the EEC is done far too often. We get so used to hearing this that we take it for granted. We hear the word "Europe" used as if the EEC embodies the whole of Europe. Yet this is the organisation that some of us have opposed from the beginning and continue to oppose because we consider it a wrong and mistaken development. To go so far as to say that the EEC constitutes Europe is quite wrong.
For this reason I have doubts about the desirability of debating this document—and that is putting it mildly. If other hon. Members feel disposed to demonstrate that objection by dividing, I shall join them in the Lobbies.

Mr. Speaker: Mr. Dafydd Elis Thomas.

Mr. Jenkins: I have not finished my speech, Mr. Speaker. You have anticipated its termination by several minutes. I am about to turn to the second document.

Mr. Speaker: I apologise to the hon. Gentleman whose speech is of tremendous interest, only to be equalled, I expect, by the next one.

Mr. Jenkins: I am not entirely surprised that you should regard what I am saying, Mr. Speaker, as two different speeches—

Mr. Spearing: There are two documents.

Mr. Jenkins: That is true. But the reason I think that Mr. Speaker thought that I had finished was that I seldom trouble him with lengthy orations. However I expect that when I speak he will give me full opportunity to develop my points.
At first glance the second document worried me considerably. Now I am a little less worried. That is partly because of the assurances that the Minister has given and partly because there are in the document some very good proposals and some even better aspirations.
However, there are some worrying things in it as well. I am sure that it is not completely harmless. For example, there is the rather worrying approach to VAT. Personally I think that VAT is a very bad tax. I do not like it at all. Further, I take the view that to apply VAT to any area of art, culture or communications is utterly pernicious.
In this country we have taken a fairly good approach to VAT. We still have it in some areas of the arts, such as the commercial theatre where is should not apply, but on the whole our approach has not been too bad. I would be very woried if by harmonisation we mean harmonising upwards. It has been suggested that there should be a harmonisation of 30 per cent., and that would be appalling.

Mr. Cormack: The document recommends a harmonised 30 per cent. of selling price. That would certainly have an upwards effect in this country.

Mr. Jenkins: It is rather vague. Our previous experience is that trying to arrive at a common policy with other EEC countries means that we have to suffer a worsening of the good traditions, practices and customs that we have established in this country. Obviously, I would be greatly concerned about that.
On the public lending right, it is true, unfortunately, that there are hon. Members in this House—one is present at the moment—who have opposed the development of a public lending right in this country. Our scheme, which is not yet on the statute book but which I hope will be soon, is immensely superior to that which operates in Germany and Denmark. I suppose that one might say that any form of public lending right is

better than none. I know that the hon. Member for Faversham (Mr. Moate) would say exactly the opposite. But to put all our eggs in one basket and to say that we accept this form of public lending right would be a very grave mistake.
Obviously I have grave doubts about this document. I share the view that has been put forward about the undesirability of a resolution at the end which seems to give the Commission a free hand to do anything that they wish after the document is passed. I like neither of the two documents, although I like some of the things in the second one. But for the reasons that I have given I think to take them together is also a mistake and I hope that I shall have the opportunity of demonstrating my dislike in the Lobbies.

2.16 p.m.

Mr. D. E. Thomas: I am grateful, Mr. Speaker, for the advance warning you gave that I was about to catch your eye. I hope that it caused no distress to the hon. Member for Putney (Mr. Jenkins).
This is a cultural debate and we are dealing with two different aspects of cultural policy. I believe that it is unfortunate that the Scrutiny Committee brought the two documents to the House together, but at least it gives us a chance to debate cultural policy. This is important to me as I represent a minority culture within the United Kingdom.
It is significant that this debate is taking place under the wing of European legislation. I do not remember a single debate on cultural policy in this House. We have had debates in Welsh Grand Committee on the arts, and debates in the House on broadcasting, but that is all. That reflects the awareness in the EEC of the importance of the cultural dimension and the lack of awareness in this House.
During the EEC referendum, which feels like a decade ago, my party campaigned on the slogan "Europe yes, EEC no". We withdrew that slogan after only a week because it was confusing to the electorate. I hesitate to add that the slogan was bilingual. I shall take that slogan as my text for this debate.
It seems that the attitude towards the EEC and towards cultural policy in the EEC is as the hon. Member for Farnworth (Mr. Roper) explained earlier. This was also confirmed by the hon. Member for Putney. Europe extends tar beyond the EEC, and it also extends within and below the structure of the EEC itself.
I was very struck by the emphasis in both documents on the contact between the peoples of the Community and the diversity of the European heritage. The use of the word "peoples", which has been chosen deliberately rather than "nations", demonstrates this. When we talk of European culture we are not talking merely of the cultures of the major languages of the member States, which are official languages within the Community. We are also talking of the minority languages within those nation States which are not official languages in the Community, and indeed other languages which are official languages but not working languages of the Community.
If we study the aims of the Foundation, we find among its objectives
support for the provision of necessary language learning facilities.
Does this extend beyond the official working languages of the Community? I wonder whether my hon. Friend the Member for Galloway (Mr. Thompson), who is an excellent Breton speaker, could take advantage of any of the facilities offered by the Foundation to existing institutions within the Community to improve his knowledge of Welsh. My hon. Friend sang in Gaelic in my constituency over the weekend but was not able to sing in Welsh. He expressed the view that he would like to do so. Does the Foundation intend to provide language assistance not only to the major languages but also to the minor languages of the Community? It is extremely important to those of us who speak minority languages.
This leads me to examine the subject of the location of the Foundation and its other objectives. I hope that the Foundation in its attempt to improve contacts between the various parts of the Community will look at developing contacts not only between the majority cultures but between the minority cultures. Some of us would have preferred to see

the Foundation located at Rennes rather than in Paris. The centralist cultural policy of the French Government has had a more devastating effect on minority languages in France than the policies of the United Kingdom Government have had in the context of the countries of Britain.
I hope that the Foundation's attitude will be flexible towards the minority groupings in the Community and towards minority cultures. The position within the Community shows that there are over 30 minority language groups within the existing member States. I incude the people of the Faroe Islands, Greenland, the Gaelic speakers of Scotland, the Occitane speakers of France, the Catalan and Basque speakers, the Corsicans and the Bretons. There are six linguistic minorities within the borders of Italy.
All these minorities have been subject recently to increasing study and interest and policies have been developed to some degree by the Governments of the nation States to promote and maintain the minority cultures. The position of these cultures varies.
I wish to refer briefly to the situation in France in respect of the minority cultures. I wish to draw from some of the material in a great tome written by my literary boss in the Welsh Arts Council, Meic Stephens, on linguistic minorities in Western Europe. He highlights the position of Breton, which is a Celtic language closely linked to Welsh. Since I am able to speak some medieval Welsh, I can hold a rudimentary conversation in Breton, but it is difficult for a modern Welsh speaker to hold an extensive conversation with a Breton speaker.
The position of the Breton language is that on the eve of the First World War there were about 1,300,000, or 90 per cent., of the inhabitants of Lower Brittany who spoke Breton. Breton was the Celtic language that was most widely spoken in the modern age. Over that period the language has declined.
The latest survey was one conducted on 21st February 1974 by the Breton newspaper in Brest. It revealed that out of a total population of 1,500,000 in Lower Brittany, only 685,000 people-44 per cent.—were capable of speaking Breton. Of these, only 18,000 out of


360,000 were children under 14, while 56,000 out of 225,000 were aged between 15 and 24 and 400,000 were between 25 and 64, and 168,000 out of 200,000 were over 65. Those statistics speak for themselves. There is a decline in the number of Breton speakers, particularly in the younger age groups.
Although I have attended a number of Fez Noz in Brittany in recent years, it is difficult to find in many parts of Brittany examples of the official use of the language in education and broadcasting. Indeed, the television time awarded by the French channels to Breton is only five minutes per week. That reflects on the centralist policies of the French Government, in regard not only to Breton but to the language spoken by the overwhelming majority of the populaion of Southern France. There are about 15 million people who live in Occitanie in Southern France, and of that population is is estimated that about 2 million use that language in their daily lives. That language has no official status in France. This again reflects the centralist policy of the French Government.
I hope that when the Community comes to examine cultural co-operation between the various member States, it will also invesigate the need to develop cultural links between minority language groups.
One of the most psychological problems of minority language groups is that they feel themselves to be isolated and up against a majority culture. This leads to frustration and to the attempts at direct action which have taken place in almost all the minority language areas in recent years to try to obtain some degree of State support and legal status and of use in business life and broader cultural support for the languages. An understanding within the European Community of the nature of minority languages would be helpful to these peoples.
I should like to see the Foundation funding work on the probelms of bilingualism and biculturalism as they affect minority groups. It could fund the study of teaching techniques not only for majority languages but for minority languages.
The Foundation also devotes part of its objectives to improving contacts between

young people in various parts of the Community. I was particularly impressed by the proposals for exchanges of young workers. There is a danger in the EEC that we are exchanging only elites. We are conscious of a European heritage as between various educated elites, particularly those in higher education, but we are not so conscious of the needs of those people who leave school and go straight to work. I believe that exchanges of young workers organised through existing bodies, such as the young farmers clubs, if funded through the Foundation, would be extremely beneficial.
It is also important that the cultural activities of the Foundation should not be linked only to the forms of what we have come to call high culture or minority culture. I am impressed at the fact that the Foundation's proposals are aimed at the largest possible number within the Community. I hope that the Foundation will be able to provide support not only for book, architectural and artistic culture, but also for media and film culture. Here again, minority language groups have specific problems. Mass media culture tends to be organised on the massive scale of French-speaking or English-speaking culture. It is often difficult for the minority language group to provide the visual means of mass communication in its own language.
Attempts have been made. There has been established in Wales recently the Bwrdd Ffilmian Cymraeg. We have been involved in a long campaign to try to get funding from the Department of Education and Science and the Welsh Office for this body, but so far we have been unable to do so. The Welsh Arts Council has given some funding, but there have been no funds made available by the Government to enable this film-making board to continue its activity. At present, funding is available only to maintain its staff in posts, but there is no funding to enable the body to make films.
The position is similar for other minority languages. Some have more access to television time than others. We have a Government commitment on the allocation of the fourth network in Wales, and this will improve the access of Welsh-speaking people to media culture, but in order to do this effectively, we need to be able to exchange television programmes and funding to


improve dubbing facilities and so on. What applies to Wales in the United Kingdom context applies with equal force to Breton and other minority languages in Europe.
I hope that the Foundation will look at these problems because it could make a distinctive contribution to improving understanding and techniques of communication, not merely at the nation State level and between majority European cultures but between minority European cultures.
I take a different view on the document concerning action in the cultural sector from that taken by some opponents of the EEC on the Labour Benches. The document tells us that EEC action in the cultural sector does not constitute a cultural policy. I believe that the Community should have a cultural policy. Within the EEC, we should be moving towards a common cultural policy which could be of particular assistance to the smaller cultural groups.
For example, we have common policies that are specifically designed to provide assistance to remote regions. It comes mainly through the common agricultural policy and FEOGA funding for hill and less-favoured areas and so on. It is time that the Community thought imaginatively in terms of using its social fund for hill and less-favoured cultures—cultures that are in a difficult position because of the increasing economic integration and centrifugal pull of the Community. Is it not time that the Community looked at ways of funding the cultural infrastructure of its remote regions and minority cultures as well as funding its economic infrastructure?
When we talk about the conservation of the artistic heritage of Europe and the major artistic monuments of our heritage, we must also appreciate that linguistic conservation is as much a part of the conservation of our heritage as is architectural conservation. An ability to understand the work of the mediaeval Welsh and Breton poets and the troubadors and to maintain that culture must be as much a part of the conservation of the European heritage as is the conservation of our architecture.
The Council for the Welsh Language has proposed to the Government that £18 million should be made available annually

for supporting the Welsh language culture. The Secretary of State has said that it is a matter for discussion and may be a matter for action by the Welsh Assembly if it is established. The argument is always that there is no funding available on a United Kingdom basis to give the sort of cultural support that we need to maintain and develop the Welsh language.

Mr. Litterick: Has the hon. Gentleman read page 3 of Annex 1 to Document R/2982/77 (AG 67)? May I draw his attention to the fact that in the context of something called "Europalia"—whatever that is—multidisciplinary teams of university professors, senior lecturers and postgraduate students are to be mustered to examine a festival in Brest? Does the hon. Gentleman not concede the possibility that such a multidisciplinary team financed by, for instance, this Foundation, is unlikely to have a very respectful consideration of local culture, bearing in mind what the document tells us what they are really at?

Mr. Thomas: I am grateful for that intervention. I intended to mention the scrutiny and assessment of European cultural festivals. Is the assessment to be merely an assessment of the metropolitan culture, which is the point made by the hon. Member for Birmingham, Selly Oak (Mr. Litterick), or will it be an assessment related to the culture of the area concerned? I know the Brest area fairly well and I am well aware of the sensitive problems faced by Breton speakers in that area who are seeking greater opportunities for their children through the French education system but are being denied those opportunities. I suspect, as does the hon. Member for Selly Oak, that the tendency will be to evaluate on a metropolitan culture basis rather than on a minority local culture basis.
There is a proposal that the Government should spend £18 million on maintaining and developing the Welsh language. We are told that resources are not available. Why cannot the Community look at the possibility of making resources available from its social fund or a new EEC cultural fund so that the United Kingdom Government will be able to take advantage of those resources to maintain and


develop Welsh? What I argue for Welsh, I argue for Breton and all the other minority languages in Europe. The richness and diversity of the European heritage must mean the conservation and development of these localised, minority, small nationality cultures as much as the development of the cultures of the nation States.
I turn finally to the festivals that the cultural policy is supposed to be evaluating. We already have in Wales an international festival at Llangollen with which I am associated. It will be held at the beginning of next month, and any hon. Member who can find time to attend will be welcome. It is a festival of dancing, singing and performing arts to which groups are attracted not only from Western Europe but from all sections of the developed and the Third World. This festival should be studied by the multidisciplinary teams of professors.

Mr. Cormack: Perhaps they will compete.

Mr. Thomas: I doubt whether they could form a choir, and if they could, I doubt whether they could sing in tune—certainly not in four-part harmony.
This sort of festival should be studied so that it can receive support. Of course, there are other festivals, such as the National Eisteddfod, to which the Government contribute £250,000, which immediately trebled its budget for Welsh language spending. Should not other festivals in smaller cultural areas of the Community be studied as part of the cultural policy, and funded? These individual, small cultures have as much to contribute to the members of those cultural groups and to the broader European heritage as any major European cultures.
The United Kingdom Government have a role to play here. When Ministers are talking about cultural affairs with, for example, the French Minister of Culture, it might be appropriate for them to put to the French Government the views held by hon. Members of all parties in this House on the cultural policies of the Government and the need to foster minority cultures. I hope we shall have that assurance at the end of the debate today.

2.41 p.m.

Mr. Nigel Spearing: I think that the hon. Member for Merioneth (Mr. Thomas) has properly used the so-called cultural debate to point out that nations, or collections of nations, do not necessarily, in his view, give a fair deal to minority cultures. I think that he was justified in doing that.
I suggest that this is a political, not a cultural, debate. If, in the effluxion of time, the Foundation gets off the ground—I hope that it does not—the Welsh-speaking cultural people, whom the hon. Gentleman represents, will find that, if they want grants, there will be hooks in the conditions either explicit or, more likely, implicit. Before very long the young people and others of whom the hon. Gentleman spoke would be shown the advantages of European union in the political sense. That would be a channel to the young people of Wales to persuade them that European integration of the kind which is not favoured by many people in this country would be a good thing. Therefore, I believe that basically this is a political debate.
There has been agreement on two matters by all who have spoken, except the Minister—namely, that these matters should not have been put on the Order Paper as one motion. There are two distinct questions before the House. One concerns Document R/2982/77 on the cultural sector, about which there seems to be general discontent, and the other relates to the four other documents on the so-called European Foundation. It is on that question, which divides the House, that I wish to speak. I am sorry that the Lord President, in his role as Leader of the House, did not put down two motions. I think it improper that he did not. I hope that he will take account of my request.
The opening speakers in this debate did not do justice to this subject. One of the most remarkable omissions was any indication about how much money might be raised and its impact on this country. It was not until my hon. Friend the Under-Secretary spoke today that we had any indication of the Government's attitude to the Foundation. An attitude was expressed in the memorandum concerning the cultural sector.
One of the defects of our procedures is that, when the Government produce a White Paper, a Bill, an order or something of that description, everyone knows that they are in favour of it. But the procedure which perforce we have to adopt for EEC matters means that we do not know the Government's position until the Minister makes a statement from the Dispatch Box.
The most remarkable feature of the two opening speeches was the difference of opinion, aided by interventions, on whether the objectives and scope of the European Foundation had been agreed. I think that reference to Hansard will show that it is a disagreed point between the two Front Benches.

Mr. Rippon: I simply had regard to the text which was issued after the Heads of Government meeting at Copenhagen on 7th and 8th April. From that it is clear that the
Heads of State and of Government laid down the scope and objectives of the Foundation and agreed on the framework for its structure and financing. The European Council decided that formal discussions on setting up the Foundation should he conducted as soon as possible. The seat of the Foundation will be Paris.

Mr. Spearing: I am grateful to the right hon. and learned Gentleman for that intervention, because that concerns my next point. The Heads of Government meeting on 7th and 8th April, if I recall correctly, was extra-constitutional. The right hon. and learned Gentleman nods his head. It was an informal meeting, the results of which were put into legislative form inside the EEC constitution by, not the Heads of State, but by the other Council. The documents are confusing on this matter. It is at that stage that the overall objectives may be changed. But it is difficult in practice for that to be done.
What Foreign Minister—indeed, what Minister of any kind—would go against what was tacitly agreed by his Head of State at the Copenhagen Summit? That is one of the ways in which the EEC can deceive the people whom it seeks to represent.
I suggest that in practical terms it is impossible for a country to renege on what its Head of State agreed—possibly over the dinner table, for all we know—as part of a package deal. I suggest

that, unless we have evidence to the contrary, that procedure was adopted in this instance. The Heads of Government and the Council meet in secret, so we do not know where we are. I suggest that that is one of the ingredients in the disagreement which has clearly emerged across the Floor of the House today.

Mr. Tomlinson: I hope that my hon. Friend will appreciate the point that I tried to make earlier. There is all the difference in the world between the statement of the European Council—

Mr. Spearing: Which one?

Mr. Tomlinson: —of an intention to establish a European Foundation in Paris and the position explained by the right hon. and learned Member for Hexham (Mr. Rippon)—that we have not yet agreed exactly what the objectives should be. There is a general declaration of outline. The intention and the wish of the European Council is that the Council of Ministers should discuss the matter in detail as soon as possible. That is the importance of the debate today.

Mr. Spearing: I understand that that is the Government's position, but, as I develop my argument, I shall suggest that it is unrealistic. Indeed, it is as unrealistic as the belief of the right hon. and learned Member for Hexham (Mr. Rippon) that he was right on the fisheries issue and on protecting British interests. It is clear that he did not and could not.

Mr. Tomlinson: That is not analogous.

Mr. Spearing: We shall see. I believe that the Government have misread the situation. Unless they show good cause to the contrary, that unfortunately is the position.
I turn now to the famous Early-Day Motion No. 108 which was mentioned by my hon. Friend at the commencement of his speech and which I challenged at once. The importance of this motion was made clear by the right hon. and learned Member for Hexham. He said that the Tindemans Report on European Union was, in effect, a dead issue and that nothing would come out of it until a majority of Members passed or put their signatures to the motion, and therefore it became a live issue.
I want to draw atention to the wording of the Early-Day Motion. It has a


preamble, but I shall not read that. It refers to:
launching a European Foundation on the lines recommended in Mr. Tindemans' Report, to be financed partly by grants from the member States and partly from private funds, with the aim of promoting, either directly or by assisting existing bodies, any measures which will help towards greater understanding of European aims, but placing the emphasis on human contacts such as youth activities, university exchanges and town twinnings.
I do not know what was in the minds of hon. Members who signed that motion. They probably noticed town twinnings, university exchanges, youth activities and all these excellent things which I would support. It is the "European aims" which worries me. Mr. Tindemans' report was concerned not only about how we should operate the Common Market as it is, but about—indeed, these were his terms of reference—European union. For my hon. Friend the Minister to say that all that was agreed was in principle to set up the Foundation, and then for him to pretend that it was nothing to do with what Mr. Tindemans said means that he is mistaken, and that is the kindest adjective I can use at this stage.
The Tindemans' Report dealt not only with European union; a whole chapter of it was devoted to the European Foundation. It is Chapter 4 and it is entitled "A citizen's Europe". Tindemans said:
I propose that the European Council should decide to create a European Foundation",
and he continued along much the same lines as we have heard. He finished by saying:
This Foundation will also have a rôle to play in presenting abroad the image of a United Europe. By virtue of its character, this Foundation will often be able to intervene more flexibly and more effectivly than national or European authorities. It will also offer the innumerable supporters of European unification in our countries an opportunity to make a personal contribution by aiding the Foundation. In this manner it will be more clearly apparent that the creation of the Union can and must be a matter for us all.
In view of that, I should have thought that for the Government to say that the objectives and scope of the Foundation are up for grabs and yet to be decided is a mistaken submission.
My hon. Friend the Minister has pointed out on a number of occasions

that we are quoting from out-of-date documents. I do not believe that the Tindemans Report is out of date in relation to the European Foundation. My hon. Friend may be able to claim that the Commission Report on this matter, made in 1977 and part of Commission Report 61/78 or Com. 77/600—documentation, of course, is always confusing—is out of date. The later document that my hon. Friend may claim supersedes it, which is Document R 734/78 of March this year, cancels it out. But there is nothing in that later document to contradict Commission Report 61/78.
It is to the Commission Report that I now turn. It is a very extensive and thorough document. In its opening remarks the Commission makes it clear that it was not the work of the Commission unaided. It set up an advisory council of outside experts who produced the framework of the report, and I see that among those whose names are appended to it are those of the right hon. and learned Member for Hexham and Lord Asa Briggs. I suspect, therefore, that quite a lot of this document was produced by the outside experts and perhaps was added to by the Commission itself. They make it clear that they follow the Tindemans line. One page 22 they repeat
The need to provide the Foundation with maximum room for manoeuvre,"—
I bet!—
the intention to entrust it with the task of promoting private initiatives in the move to achieve European union";
and then at the end it repeats Mr. Tindemans' point about opportunities for supporters to supply funds. The report makes it clear that it follows the Tindemans line. I can see nothing in later documents to suggest that that has now gone out of the window. It includes an interesting paragraph on the research into European integration, and that is practical, not only theoretical, research, and a number of other topics.
So it seems quite clear, unless the Government can offer some proof to the contrary, that the objectives and the operations of this Foundation are already more than half agreed, in practice if not de jure.
A number of other matters in the document could perhaps be changed, but the structure of which is fairly clear. There


will be a council to run the Foundation, and it is proposed that it should meet twice a year. There will be a management committee of about nine distinguished European figures who will presumably be the patrons of the substantial funds that will be scattered around the Community. These people will presumably be in a position of patronage and able to decide what sort of organisations will receive money, and upon what basis and criteria and according to which priorities the funds will be allotted.
The Commission document also deals with the legal status of the Foundation. This is of considerable significance. It discusses a number of ways by which the Foundation could be established. As I understand it, it comes down fairly clearly in favour of the solution of using Article 235 of the Treaty of Rome. The difficulty is that the Common Market does not make explicit provision for such a Foundation in the Treaty. A means therefore has to be found whereby public money can properly be channelled to it.
Article 235 is the let-out clause in the Treaty of Rome. It reads
If action by the Community should prove necessary to attain, in the course of the operation of the common market, one of the objectives of the Community and this Treaty has not provided the necessary powers, the Council shall, acting unanimously on a proposal from the Commission and after consulting the Assembly, take the appropriate measures.
In opening the debate, the Minister said that this should be part of the obligatory expenditure of the Community. I see him nodding his head. But Article 235 is surely the non-obligatory part. Therefore, if the expenditure is not under Article 235, may we be told under which article the Government expect to support the creation of the Foundation? Surely the matter cannot be covered by Article 100 because that deals with the harmonisation of existing powers. If it cannot be done under Article 235, surely it cannot be done at all. To do it under Article 235 would require the unanimous assent of the member States.
In a letter to me, my right hon. Friend the Minister of State made it clear in a discussion on the expanded powers of the Assembly that
the decision to launch such a new policy has to be taken by the Council of Ministers, acting unanimously".

So it is clear that the Government have a positive veto. Therefore, if the proposal goes further, the Government will have to give their assent under Article 235. I believe that on the present basis the Government should not give that assent. If they are to be true to the Prime Minister's letter, which was quoted by my hon. Friend the Under-Secretary, they cannot give their assent, for the reasons I have explained.
Not only is the Foundation obviously and clearly designed to promote European integration and European union. It does it in a very clever and effective manner. It does it by making grants to existing organisations, and we are told in the financial part of the proposals that the eventual sums of money will be between, initially, 5 million and 10 million units of account and ultimately 20 million, which, taking an exchange rate of £1·5 to the EUA, is in the region, possibly, of £10 million a year. Of course, that could be reduced, but equally it could go up.
But, as has been made clear, this money is not only money which is likely to be in the Foundation. There will be calls on corporate and private persons' purses, and the proposals make it clear that it is expected that nation States will give tax relief on the money so donated. So the additional money which it will hope to collect will attract some tax benefits in the countries from which it is drawn.
I ask my hon. Friend the Minister of State, Department of Education and Science, who has some knowledge of educational charities, whether the EEC Foundation will be subject to the charitable exemptions which we have in this country. Clearly it will be a political charity, and we in this country quite properly say that political charities shall not be exempt from tax. But even if it was not exempt in this country, it would no doubt be exempt in other countries, and therefore valuable additional private moneys will be donated at public expense.
I return to the method by which grants will be made. It will, of course, be indirect, and therefore, any body promoting exchanges, visits or cultural activity of any sort, or, indeed, wishing to have a look at the EEC will quite clearly have to show evidence of being in tune or in accord—or certainly not out of accord—with the objectives of the Foundation.
Therefore, if the organisation which may apply for assistance can show that it is providing an opportunity for a speaker of a European union or someone from the Community to address a meeting or conference, or perhaps to distribute literature, that will be all to the good. If I were a trustee of such a fund, I would think that that was the right thing to do and would certainly bear it in mind when looking at the applications and the undertakings that would be given, or, indeed, the likelihood of such additional activities taking place with the applicant body. Therefore, I suggest that the indirect effects of this Foundation could be very considerable indeed.
But the matter does not end there. There may be many organisations that would like to have the money, but they know that they would not stand a chance unless their oriented or slanted their existing activities in a particular direction, because they would know very well that unless they did that they would not stand a chance, or would stand less of a chance, of getting the money.
Therefore, the idea of complementarity, which sounds so nice and is a good word, is in fact not complementarity at all. It is an amplifier circuit. As has been said, it is a catalyst. That is quite right. A catalyst enables things to happen which did not happen before, and it will amplify the effect of this fund in many subtle and unseen ways which might not be able to be proved.
One of the other objectives of this organisation is that it can provide money for research. The universities of this country do quite a bit of research on EEC affairs. One of them has an institute of European studies. I shall not name the university concerned, because I was told only yesterday that it gets a substantial amount of money from the existing European institutions. I shall have to check that. Therefore, I shall not name it. But let us suppose that it got only half its present funds from existing EEC sources. This Foundation will be more flexible. I suggest that one of the important factors in academic life is objectivity. How can any institution or person that is expecting or would hope for money from such a foundation or, indeed, moneys from the EEC at present be expected to be impartial?
Indeed, the matter goes further than that. Money can buy advocacy, but money can also buy silence. If an individual or an institution or a body which may be operating for excellent purposes hopes for resources from a particular quarter, it is less likely to be objective and less likely to speak out when it ought to speak out than it would be if those resources were not available.
I do not say that the European Foundation would operate knowingly in this way if it were founded, but I suggest that there are certainly dangers in that direction.
When British liberties are at stake, we expect dogs to bark. Everyone knows the famous Sherlock Holmes story of the dog that did not bark because it trusted someone who was betraying its trust. The Government should have barked, but instead several Ministers' names appear on the motion. The right hon. and learned Member for Hexham, who knows more about the background to this Foundation than anyone else, did not disagree on the facts—I do not expect him to agree with my opinion. How anyone can claim that the Foundation has nothing to do with European union is past my understanding. The only charitable explanation is that they have not read the documents as I have or seen the possibilities.

Mr. Rippon: The hon. Gentleman said that I have not disputed any of the facts, but only his opinion. In the document prepared by the working party, we carefully concluded that the final choice of objective and priorities should be taken by the European institutions. We said that because we covered a wide range of possibilities. The Commission then made certain changes in the thrust of what the working party suggested. As I understand it now, the decisions of the Council of Ministers improve upon—at least in my view—the views of the Commission. So this is a continuing process, and the hon. Gentleman should recognise that.

Mr. Spearing: I am grateful to the right hon. and learned Gentleman for partly confirming what I said and for adding some information. But that immediately illustrates our problems with the EEC. Although there may be some modifications, the background still stands.


It has not been negatived. The Foundation, when established, will have at least as much money to disperse in the United Kingdom as the Nuffield Foundation—that is, £1 million a year. On the figures on the documents, that could easily be the figure available in two or three years.
Therefore, when these grants and activities get going and people begin to object, saying, "We did not realise that it would be like this", they will be able to point back to these documents, to the Tindemans Report and even to my speech and say "It was all clear at the time."

Mr. Litterick: My hon. Friend may have assumed that the sums of money written in these documents are the probable grants to the United Kingdom. Surely they are not. They are probable contributions by the British taxpayers to this European body, which they will not necessarily get back, if the history of the EEC tells us anything.

Mr. Spearing: I think that my hon. Friend has to think about income and expenditure. I was referring to the expenditure by the Foundation. The converse is true. If some parts of the Community lag behind on integration or are less enthusiastic for a European union than others, if I were a trustee of this institution I would switch the funds accordingly. I might give more to those areas where I thought fertilisation was required.
Unless the Government can show otherwise, it seems that, far from being neutral, the concept of this Foundation is to further European union. In quoting the Prime Minister as saying that we do not favour European union, the Minister is trying to get the House to take note of these documents without dissent, thereby tacitly agreeing to a Foundation which could be against the freedom of this House and the British people. Any economic union in Europe will clearly be at the expense of the powers of this House and the self-determination of the British people. I am surprised that my hon. Friend the Under-Secretary wags his head in disagreement about that obvious point. There is a distinct risk that this fund, through the use of British taxpayers' money—as well as the money of taxpayers from elsewhere—could undermine

the principles of the freedom and sovereignty of this House which the Government claim they seek to maintain.

3.10 p.m.

Mr. Roger Moate: There seems to be some doubt about what precisely the Government have agreed. One thing is clear. They have already agreed in principle to the establishment of a European Foundation. Is it not somewhat discourteous to make such a commitment without bringing that proposition to the House? It seems that that could have been done, and I think that it should have been done.
We have been told by the Under-Secretary of State that the objectives of the Foundation have not been agreed. It seems odd that a Foundation such as this should be set up in principle without anyone knowing precisely what it is to do. In that sense I much prefer the version of events given by my right hon. and learned Friend the Member for Hexham (Mr. Rippon). He read out the statement made following the Copenhagen meeting, which said that the objectives had been agreed. I suspect that while this debate will have some effect on the margin, broadly speaking the decisions have already been taken in principle. It is likely that progress will follow the lines laid down in the documents before us.
In procedural terms this is the sort of thing which the House could have debated before the event. Why was that not arranged? If support is required for a proposition of this kind, the House of Commons should have been involved at an early stage. That would have avoided procedural disputes arising.
If we were talking about a Foundation which would be devoting its resources to promoting festivals in Llangollen or sending youth orchestras around Europe or choirs and the like around Europe, I would have no objection. If the Foundation were to be used for promoting cultural exchanges between European countries—not just Common Market countries—I doubt whether anyone would quarrel with the proposition.
My right hon. and learned Friend and others have hotly denied that this Foundation has any propaganda purpose. It has, they say, a cultural purpose. If that is so they could have tried to avoid


some of the traditional federalist argument that appears throughout this document. In promoting this Foundation I do not believe that my right hon. and learned Friend was seeking to establish a federalist propaganda machine. But once this institution has been created it will be beyond his control. Given the philosophy that runs through the documents and give the fact that the person in charge of the Foundation could be an enthusiastic federalist, it has to be acknowledged that once it is established, the matter is beyond the control of my right hon. and learned Friend. There is a danger that something which he thought would be a genuine association, promoting cultural exchanges, will become a propagandist machine for European union, thinly disguised as a cultural organisation.

Mr. Tomlinson: And the Government would agree to that?

Mr. Moate: The Government agreed to the Foundation being established. Once that has happened it is beyond their control. I suspect that after the Foundation is established, the money that would go into it would be used to promote seminars on economic and monetary union, to promote exchanges so that people could see more of the Brussels bureaucracy and to enable lectures to be given on the need for a common currency. This is not a figment of my imagination. It is in the documents. They have been quoted but they bear repetition. If my right hon. and learned Friend had not wanted this to be the philosophy behind the Foundation he should have avoided this language.
One sees from the beginning that the genesis of this proposal comes from Mr. Tindemans' report on European union, so at once it has to be seen in that context. The introduction to the document says that the Foundation has
the object of making European integration"—
not unity, but integration—
'a matter for us all'".
On the next page, it says, obviously with a touch of regret,
Nor does it"—
the Community—
have even a symbolic presence in their midst: no flag, no currency, not even (as yet) a common passport".

So clearly this is seen as a substitute for these other supranationalist trappings that the federalists so often claim to be desirable.
Later, according to page 3, Mr. Tindemans added,
This Foundation will also have a role to play in presenting abroad the image of a United Europe.
He uses a capital "u" and a capital "e". That is what Mr. Tindemans said, and that is the document we are being asked to take note of today. It is that theme which runs throughout these documents and which I say will set the theme and the spirit of the Foundation.
All that could have been avoided. It will be interesting to know whether the Minister can avoid it. We are now in his hands. The Foundation has been agreed in principle. It will obviously go ahead. But the Government, I suspect, if they show willing, can lay down very strict rules and can say explicitly that this will not be a propaganda machine, that it is there not to promote the EEC but to talk about European culture. If the Government can do that, so be it—it will be a welcome step forward. But there is no sign of it in these documents as they stand and which, broadly speaking, we are being asked to approve, since "take note" often implies that the House has given its assent.
It seems to me that what we are setting up here is a propaganda machine for the Common Market, and not what was originally no doubt genuinely intended to be a sensible vehicle for promoting general understanding and cultural exchange between members of the Common Market.
The further question arises from a clear statement made by the Under-Secretary of State. He said that the competence of the Community to legislate on these matters did not exist. Why, then, are we here at all? Why are we debating in the House matters of cultural exchange and educational matters that are not in the Treaty of Rome? I do not want at this stage to elaborate on this aspect at great length, but I am sceptical whether Article 235 gives a proper legal basis for a foundation of this kind. If that is so, why is the House discussing these matters in such depth?
Even if a legal basis could just be squeezed in by the lawyers—and they are clever at squeezing such things in—it is clear that, at every turn, there are those who are anxious to stretch the Treaty of Rome further and further so that it embraces every aspect of our life. It would have been more proper for the Government, given their fairly robust line on Community matters generally, to say, "No. This is outside the scope of the Treaty of Rome and we shall have no more to do with it."
That brines me to the other document, which is surely even more positively outside the scope of the Treaty of Rome, and therefore one wonders again why this sort of document comes before us. It is a document on
Community action in the cultural sector".
I do not know where cultural sector activities appear in the Treaty of Rome—I do not think that they do. If so, the document has very little value. But when one analyses it, one finds that it has even less value.
There is an element of farce in the presentation of some of these documents. The introduction refers to the Paris Summit, quoting the final communiqué as saying that the Community
should result in an improvement in the quality of life as well as in living standards", and that
particular attention will be paid to intangible values".
That is the preface to legislation, or proposed legislation. As soon as one uses the phrase "intangible values", one tries to produce Community legislation which will somehow embrace them. So often in these Community documents one finds great sentiments or grand platitudes, with an attempt to try to elevate them into legislation or guidelines for countries such as ours to accept.
The more we look at the documents, the more we see that they fit into that theme of useless platitudes sometimes verging on dangerous interference in matters which are properly this country's concern. I am not opposed to many of the harmonisation ideas in the documents There is nothing wrong in harmonising value added tax if one can do so voluntarily. It is a desirable objective. There is nothing wrong in trying to harmonise public lending rights, because that would

make for a freer exchange of a variety of matters. But what I object to is Brussels trying to tell us how we should do it, particularly when it has no legal basis in the Treaty of Rome.
The issue that I particularly wanted to talk about was public lending rights. I had expected to cross swords with the hon. Member for Putney (Mr. Jenkins) on this matter, but I found that he and I were in almost total agreement on our general approach to the documents.
I am opposed in principle to public lending rights, because I do not think that there is such a thing as a right to any benefit through the public lending system, but I am not opposed to proper help for authors. That is a very different matter.
There could be some benefit from harmonisation of treatment of authors in different Common Market countries. I believe that, for example, the Republic of Ireland is much more generous to authors. I believe that many of them pay no tax. Let us harmonise on that principle, but let us have no compulsory harmonisation on this or any other public lending rights scheme.
The Government document states clearly that they are still in favour of their scheme. I believe that to have been a had scheme. It was administratively unfair and nonsensical. It proposed that £1 million be spent, with half the money going on administration. The scheme would have paid about £5 per author per annum, with no benefit going to the writers of works of reference. Most would have gone to fiction authors whose books were lent from the library shelves.
That was a bad scheme. Paradoxically, I think that the Community scheme is somewhat better. As I understand it, the proposal offers a payment for books on the shelves. That would mean that more serious writers, whose books were not borrowed as much, would still receive a payment, instead of the money simply going to the most popular authors, who are therefore probably the least in need of any financial support.
I should like to see the Government adopt their next statement as a matter of principle:
The Government's policy is to provide selective support through the Arts Council on the basis of an expert assessment of merit.


That is the way to do it—through the Arts Council and not through a public lending rights scheme. This feature of the Community's proposal is objectionable. The Government's position is wrong. We should drop public lending rights from our discussion, whether it be Community-inspired or inspired by the Front Bench. Then we can work on other means of assisting authors, through the tax system or selective support through the Arts Council.
I believe that neither document before us will contribute anything to the benefit of the people of this country. We should be as well off without the documents.

3.23 p.m.

Mr. Douglas Jay: The speech of the hon. Member for Faversham (Mr. Moate) has shown that there is scepticism in all parties about the proposals before the House.
We debate these matters in a cultural atmosphere, which has been demonstrated by the fact that the hon. Member for Harrow, East (Mr. Dykes), who has now left us, was fast asleep through most of the debate. That may be an appropriate state of mind for a pro-Marketeer, who simply stands aside and watches all these events going forward, but I regret that the hon. Gentleman has left us. I regard it as unfortunate that these far-reaching proposals should have been rolled up together in one take-note motion and discussed at a time when many hon. Members cannot easily be in the House and it is exceedingly difficult to have an adequate debate.
The two proposals for a European Foundation and for cultural exchanges are, of course, important. But for the sake of brevity I concern myself mainly with the proposal for the so-called European Foundation. As I think the debate has shown, this is neither non-controversial nor trivial. For those who have not studied the papers carefully, it is represented as a purely cultural organisation. I agree with the hon. Member for Faversham that if it was only a matter of cultural exchanges and contacts between students and universities, there would be no objection or political controversy about it. But as soon as one studies the documents, one finds that this proposed Foundation is largely, although not

wholly, a poiltical propaganda organisation which is designed to spend public money on propaganda in favour of what is alternatively called "European integration" or "European union", all of which means leading the EEC into some sort of federal State.
There are a number of documents, and I shall not go into them in detail at this time of the week. But the basic document is entitled "Report from the Commission on the Establishment of a European Foundation.". It starts very candidly under the heading "Tasks and objectives" with the following phrase:
To strengthen understanding of, and support for, the work of the Community".
In addition to a lot of other phrases it goes on to state:
A continued high level of popular support for the Community cannot be taken for granted.
That may well be true. Mr. Tindemans is then quoted as saying:
This Foundation will also have a role to play in presenting abroad the image of a United Europe".
We then come to the Report from the Council to the European Council which is dated as late as 3rd April this year. At the start of that we read:
The objective of the Foundation is…to promote the better understanding of the European cultural heritage 
—that sounds innocuous—
and to further a greater understanding of European integration".
The documents are simply studded with phrases of that kind which one need not set out in detail. What all these documents show is that whether or not one favours a federal EEC—of course, opinions legitimately differ, although I understand that the Government do not—this Foundation is intended to promote not just cultural aims but political argument.

Mr. Spearing: That is right.

Mr. Jay: Of course, controversial political argument is perfectly legitimate, but what is not legitimate is to finance it with the taxpayers' money under the disguise of setting up a cultural, educational organisation. Indeed, the slide nowadays into the use of taxpayers' money for controversial political purposes, which seems to be seeping into this country from the Continent, is a particularly


vicious tendency. Substantial sums of public money are involved. For instance, 20 million units of account, which is about £10 million, are mentioned. Here, if anywhere, is a good case for economy in public expenditure, about which we are always hearing lectures from Conservative Members, although we never get a practical instance of where it might be adopted. The most effective possible way of carrying out economies is to stop spending money on new projects which have not yet been adopted.
It seems to me that this European Foundation is even more objectionable for two other reasons on which, to some extent, the hon. Member for Faversham touched briefly. First, we are told that the Foundation is to be independent. That sounds very fine. But what it means is that as soon as its board is set up—with possibly the right hon. and learned Member for Hexham (Mr. Rippon) its chairman, for all I know, and I am sure that he would have the best of intentions—it can spend these millions of public money as it chooses with no control by Governments or Parliaments anywhere in the EEC. That seems to me to be a thoroughly bad principle.
Secondly, and even more objectionable, it is to be called "a grant-making body". We all know from experience of the European Movement over recent years—a strange, hybrid quasi-public, quasi-voluntary body—what that tends to mean. It means an attempt to influence by money payments all sorts of organisations, from universities to newspapers and heaven knows what, in the conduct of publicity and propaganda. Some unkind people, in plain English, would call this bribery or corruption, especially when it begins to influence universities, schools and newspapers. When it is done in the pro-Market cause, it is described as a grant-in-aid, a subsidy, a subvention or some other more polite word.
If this Foundation intends to finance political propaganda for a federal EEC with public money, it is a vicious proposal. If it does not, it is entirely unnecessary. There are already numerous organisations in Western Europe and elsewhere which can promote educational exchanges, cultural contacts and so forth, notably, incidentally, the Council of Europe's European Cultural Foundation now operating in Amsterdam, which

covers a much wider area of countries than the EEC. We already have that European Cultural Foundation, to which no one objects because it is genuinely a cultural Foundation, and it is mentioned in the documents. If that is the intention, why should not it carry out this job adequately? Why have a second European cultural Foundation which will arouse all these suspicions?
From what I understood of the Minister's contribution to the debate, he suggested that the Government's attitude would be to keep a close eye on this animal, to insist on safeguards, to tighten the terms of reference, and so on. But this leaves us in a very unsatisfactory position. Where are the terms of reference? Are they not already in these documents?
If the Foundation is to be genuinely cultural and non-political, to which none of us would have objection—though we might feel it to be unnecessary—and to have no connection with European federation, it would be an entirely different animal from the one described again and again in these documents.
May we know today what terms of reference the Government have in mind? I hope that they are proposing to lay before the House at some period in the future some new document which will be the effective terms of reference of this organisation. If so, may we be told today that no British commitment will be given to any such scheme until the House has seen, debated and approved the proposed new terms of reference of this Foundation? If we could be sure of that, our anxieties would be abated considerably.
So far no sound case has been made out for spending a great deal more public money on a project like this. Unless the Government can get specific assurances about this, I hope that the House will not in any way approve or endorse the proposals today.

3.36 p.m.

Mr. Tom Litterick: To the best of my knowledge, the net accumulated cost to the British taxpayer of our contributions to Common Market institutions—the budget itself, the Coal and Steel Community, and the European Investment Bank—to the end of last year was £1,800 million. That was the


difference between what we paid to these institutions and what we received back from them in terms of grant. In other words, we come to this topic today in the full knowledge that the cost to the British people of membership of the EEC in straight financial terms is already very heavy, and no doubt 1978 will bring a further tranche of costs.
My remarks do not refer to the other costs in terms of food levies and the consequent additions to the household expenditure bills of the average British family. My hon. Friend asks us today to take note of these apparently innocuous documents to set up this apparently altruistic cultural body, which will cost the British taxpayer another £1 million-plus a year.
It is not hard to understand why we feel just a little sceptical about this, if only on financial grounds. As speaker after speaker has demonstrated, our scepticism deepens as we go through these documents page by page. Nothing that has been said by the Minister or by the right hon. and learned Member for Hexham (Mr. Rippon) has served to diminish that scepticism.
I am puzzled by the proposals for cultural exchanges. Is there a problem here? Everyone is in favour of culture, but nobody is very much in favour of paying for it. I wonder why it is felt that there is a problem, and if so, should it be tackled in this way?
Mick Jagger does not have any problem in moving from here to the countries of Western Europe and back again. Nor does he have any problem in making a lot of money, or in persuading people to pay money to hear him. Andre Previn and his orchestra have no trouble going to Amsterdam, Paris and Berlin, and similarly the Concertgebouw Orchestra of Amsterdam does not have problems coming here. That is cultural exchange and there have never been any problems. It has been going on merrily for many years. It takes many different forms and it is sponsored in many different ways.
The most important aspect of all is the curiosity of the peoples of Europe to visit one another. More than 3 million Britons visit Europe each year. Their idea of Europe is not that of the Eurofanatics—it is not the mini-Europe tucked

away in the Western corner. It is the whole of Europe. British people make their own decisions about where they will visit and spend their own money. They visit every country in Europe—the real Europe, not just the countries that make up the artificial group in these documents.
That is the most encouraging sign not only of the fact that the British people are outward-looking but that their idea of the Continent, of which they are part, is much larger than the narrow-minded, defensive and rather phobic people of the Community who constantly espouse the interests of this thing called the European Economic Community.
In this connection, speaker after speaker in this debate has suggested that the purpose of these proposals is to make permanent the rather ad hoc propaganda institutions which have existed on behalf of the Common Market for many years and which, for instance, spent such large sums of money in greviously misleading the British people in the referendum two years ago. They want to make it permanent. There is a problem and that problem is theirs, because the Common Market—not as an idea but as an actual living fact—now looks decidedly tatty to British people and very much less significant than it was made to appear two years ago in the referendum campaign.
Therefore, more money has to be spent, so the Euro-fanatics clearly think, to make sure that a pro "little Europe" mentality is developed among the mass of the people. That is the purpose as set out on page 7 of the Commission document. Under the heading "Activities: Youth Work" it says:
It is of vital importance for the European venture"—
that is the big lie—
that young people…should…be supplied with better information.
On the next page under the heading "Schools", the document says that there should be:
a wide range of activities designed to improve teaching on the Community in schools".
We have recently witnessed the attitude of Tory Members on the subject of politics being taught in schools, but they do not regard this as politics. The EEC is some kind of transcendant truth that is above politics. That view is not shared


by the majority of Labour Members, or indeed by the majority of the British people. The EEC is very much a contentious issue in this country in our politics.
The document goes on to talk about "improving teachers' understanding of the Community." In other words, the teachers are to be programmed as remote control propagandists for the EEC. The money for that will come from us and will be channelled through this Foundation, as it is called.
Later the document mentions research into European integration. I do not recollect anybody talking about that aspect during the referendum campaign, except to say "No, that is not on the agenda, friends and citizens. Please vote "Yes'". This was denied during the referendum campaign. They said—and my hon. Friend the Under-Secretary of State for Foreign and Commonwealth Affairs was one of them—"No, European union is not on the agenda." But here it is—contained in this document in page 12.

Mr. Tomlinson: I still say it is not on the agenda.

Mr. Litterick: I can only suggest that my hon. Friend cannot read or, if he does read that his level of understanding is not very good.
A little further in the document, on page 21, we see a summing up of the purposes of this institution. The document makes no bones about the matter but simply says:
if the Foundation does its work properly, the end result should be to increase public awareness and involvement in the European venture…our attempts to achieve European union will remain a dead letter unless there is an increased awareness of what the Community means in philosophic and material terms.
In other words, it simply wants us to sanction, on behalf of the British people, the funding of a propaganda agency to further and perpetuate a set of institutions which, thus far, has done nothing to serve the interests of the Britisht people. On those grounds alone—and they are substantial grounds—we should refuse to take note of these ridiculous documents.

3.45 p.m.

The Minister of State, Department of Education and Science (Mr. Gordon Oakes): We have had an interesting

debate, although some of the principles underlying some speeches have misunderstood what the House is discussing. I shall deal first with that aspect and with the timing of the debate.
My right hon. Friend the Member for Battersea, North (Mr. Jay) and my hon. Friend the Member for Newham, South (Mr. Spearing) repeated that there was insufficient information before the House and that hon. Members did not know sufficient of what we were talking about. Of all hon. Members, my hon. Friend the Member for Newham, South takes the most meticulous care on any document relating to the EEC. He is right to do so because there are many such documents and they could be rushed through the House without hon. Members knowing anything about them. My hon. Friend frequently complains that documents are not available in the Vote Office, and I agree that it is shocking for the House to be asked to debate a document when copies of it are not available. But that criticism cannot be levelled at these documents.
The decision in the European Council was made in December 1977 and a document signed by my right hon. Friend the Secretary of State for Education and Science was issued on 3rd March 1978. Paragraph 3 of that document states clearly:
In December 1977 the European Council considered the report and approved the principle of establishing a Foundation. It instructed the Council of Ministers and the Commission to examine the proposal in detail and report back to the European Council.
The contentious document relating to the European Foundation was available to the House on 3rd March and my hon. Friend the Under-Secretary of State for Foreign and Commonwealth Affairs has stated as clearly as it can be stated that what was established at that time was the principle of establishing a Foundation. That is all; and that is all that the Government are asking the House to take note of.
My right hon. Friend the Member for Battersea, North rightly raised questions concerning the details and accountability and I shall deal with those in a moment, but the principle before the House is the principle of establishing a European Foundation. The subsequent running of


such a Foundation will be a matter for member States and the Council of Ministers to decide.

Mr. Spearing: I was not complaining about the lack of documentation. My hon. Friend misunderstood my criticism. I said that there appears to be a lack of agreement between the Front Benches as to what are the objectives. I regard the memorandum from the Secretary of State as an incomplete description of what was agreed. I have a copy of the deposited document No. 7559 relating to the Copenhagen conference. It includes the words
to promote a better understanding of the European cultural heritage in its rich diversity and oneness and to further a greater understanding of European integration.
It is clear from this and from the Commission document what the objective was from the beginning.

Mr. Oakes: I was referring to the complaint that my hon. Friend and others made about timing. I was trying to point out that this documentation was at least before the House in March. When my hon. Friend says that there may well be disagreement between the two Front Benches, I can tell him that, judging from the tone of the right hon. and learned Member for Hexham (Mr. Rippon), and from the rather cool response to the document by my hon. Friend the Under-Secretary, and given the remarks I shall be making on this and the other document in a moment, there will be considerable difference.

Mr. Rippon: There is no difference between us. I am entirely satisfied with what the Heads of Government, including our own Head of Government, have done at Copenhagen.

Mr. Oakes: I am grateful to the right hon. and learned Gentleman, whose views I respect. He is a great European and is perhaps much more in favour of Mr. Tindemans' words than I or my hon. Friend would be. But we are not debating what Tindemans said. The concept we are considering and which will emerge from the setting up of a European Foundation might well be markedly different and distinct from anything that Tindemans was proposing in his—to use the word used by my hon. Friend the

Member for Famworth (Mr. Roper)—lyrical enthusiasm for the idea of European union. So, on the time scale, the facts were available to the House for a considerable time before the debate.
It is always easy for hon. Members to attack my right hon. Friends the Leader of the House and the Government Chief Whip about the timing of the debate. I can assure hon. Members that Ministers do not like debates on a Friday afternoon either. However, the Government always have difficulties in arranging full and lengthy debates on documents, particularly European documents. It is a question of balance. Is it better to discuss the document on a Friday afternoon, when we are reasonably fresh, rather than at midnight, when so many of the European documents come before the House, after a hard day's work by Members?
It was important that the documents should be discussed, and that was the recommendation of the Scrutiny Committee. It suggested—and the Government accepted the suggestion—that the documents should be discussed together, although I agree with hon. Members who have made the point that they present a mixed bag. They do not hang together. This is not one series of documents. The two documents are being debated on a Friday for the convenience of time and the House.
Let me deal, first, with the document on Community action in the cultural sector. It is far less controversial than the document on the European Foundation. The debate was remarkable in that criticisms of the document, many of which I would share, came from those hon. Members who are known either for their commitment against Europe or for their commitment for it. The document contains many proposals, and a number of them do not affect my Department. The cultural and educational proposals affect my right hon. Friend the Secretary of State, my noble Friend the Minister who is responsible for the arts, and myself. But there are other parts of the document for which the Home Office and the Department of Employment are the lead Departments.
The document is a mixed bag which contains many ideas. Some of them are useful. Most of them are already being pursued. Perhaps, as my hon. Friend the


Member for Farnworth said, supported by the hon. Member for Faversham (Mr. Moate)—two hon. Members who are on different sides of the House and of the European debate—these functions could probably be better done by other organisations, which would be preferable to setting up a specific European organisation. I concur with that.
The other general point that I make is that the system for supporting the arts in this country differs significantly from the system in some other member States of the EEC. In particular, insofar as central Government provides financial support for the arts and crafts in this country, the money is provided by means of the so-called "arm's length" principle. It is for the Arts Council, the British Film Institute, the Crafts Advisory Committee and the directors and trustees of the national musuems and galleries to decide how they shall disburse the money which the Government make available to them.
Individual decisions on which artists and craftsmen, which concerts, plays, operas, exhibitions, theatres, companies and so forth should be supported, and by how much, are left to an independent body of experts drawn from a variety of backgrounds who apply criteria based on professional standards of excellence. This differs considerably from the practice in some other countries, which take a far more interventionist line, where a Government Department is responsible directly for cultural matters and makes payments direct to individuals and organisations in cultural occupations, and where the primary consideration is to put it mildly, not necessarily the quality of the artistic end product.

Mr. Hugh Jenkins: As my hon. Friend has touched on the Arts Council, will he take this opportunity to tell us how he is getting on with the undertaking in the Labour Party's election manifesto to make the Arts Council more democratic and representative of those who work in the arts and in entertainment?

Mr. Deputy Speaker (Sir Myer Galpern): Order. That has nothing whatever to do with the debate.

Mr. Oakes: I bow to your ruling, Mr. Deputy Speaker. My hon. Friend repeats the same question every month. He may be lucky at the next Question Time. I

shall try to have an answer in time for it. However, it would be improper for me to deal with it today.

Mr. Deputy Speaker: Absolutely.

Mr. Oakes: The document ends with a draft resolution which asks the Council to agree that Community action should be implemented on the basis of the guidelines laid down in it.
What are these guidelines? My hon. Friend the Member for Farnworth said that they were lyrical. If these are lyrics, I should not like to try to set them to music. They represent a heterogeneous collection of proposals, but it is very difficult to discern a common thread other than a loose connection with the cultural sector.
Surely guidelines should attempt to reconcile or at least reflect the different approaches of different member States. There would have to be prior discussion of the philosophical principles involved in State subsidisation of the arts and the reasons for the differences of approach from country to country. But whether any of this is the business of the EEC would have to be settled before such a discussion could be held. My hon. Friend the Under-Secretary of State for Foreign and Commonwealth Affairs has already indicated that the question of the competence of the EEC in this field is not at all free from doubt. Yet, even if the resolution were not agreed, much of the activity on customs procedures, on VAT, on employment programmes, on cultural exchanges, and so on, would continue anyway. Some of this action would proceed in the EEC, but some of it is for the Council of Europe and UNESCO which have a clear remit and considerable experience in the cultural field.
I do not wish to comment on all the points raised in the document, partly because, as I have explained, many of them are already under consideration by other Departments in other contexts. They may affect the so-called cultural sector, however that might be defined, but they also affect other sectors, other workers, other goods and services, and I should hesitate to advance any special pleading on behalf of those engaged in cultural occupations on the basis of arguments put forward in this document.
However, I should like to say something about public lending right. This matter has been referred to by my hon. Friend the Member for Farnworth, by the hon. Members for Staffordshire, South-East (Mr. Cormack) and Faversham and, indeed, by my hon. Friend the Member for Putney (Mr. Jenkins). Again, this document has had a surprisingly unifying effect, because my hon. Friend the Member for Putney and the hon. Member for Faversham, although bitterly opposed on the Public Lending Right Bill, are at least united in not wanting this proposal. They consider that this proposal could be far worse than anything that the Government have produced or might possibly produce.
The proposal in the document is that public lending right should be harmonised on the basis of the existing schemes in Denmark, the Netherlands and West Germany. These existing schemes differ in some important respects among themselves and they also differ from the scheme which the British Government sought to introduce in legislation, which, as the House will be aware, has been very fully considered in recent sessions but which has unfortunately been obstructed. The Government are now considering the possibility of introducing their scheme on a voluntary, non-statutory basis pending the securing of a statutory basis. The continental schemes are based on different principles. Some are based on purchases of books as opposed to the principle in the Government's proposals of actual borrowings. The sample of libraries on which the statistics are based is very small compared with our proposed sample. Some schemes cover reference books, which will initially have to be excluded from the Government scheme. The collecting and distributing agencies abroad are in some cases semiprivate bodies, rather like the Performing Right Society, while our proposal would be for a public sector body to distribute the payments to authors.
The Council of Europe has recently published a report on PLR which seems to favour the United Kingdom Government scheme. The distinguished rapporteur was my hon. Friend the Member for Warley, East (Mr. Faulds). Also, some other member States neither have

nor appear to be contemplating any PLR scheme.
A lot of work will need to be done before there can be any serious prospect of harmonisation in this field. Frankly, I consider that the Commission's proposal is wholly premature. I repeat, however, that the Government remain committed to introducing their own scheme at the earliest opportunity.
I hope that in the context of what I have said on this document—before I come to the more controversial document on the Foundation—I have assured the House that this document will not receive an uncritical welcome from British Ministers and officials if and when it is discussed in Brussels. I have noted the various detailed comments of hon. Members. They will provide useful material for such discussions. It remains to be shown that this collection of proposals is necessary or that it contributes anything new or worthwhile to what is happening anyway. To say the least, our stance will be a highly sceptical one.
Now I come to the probably more controversial document relating to the European Foundation. I think that I should begin by describing the present state of negotiations in Brussels.
In her updating memorandum of 12th June, my right hon. Friend the Secretary of State for Education and Science explained that the European Council of 7th–8th April had agreed that the Foundation's seat should be in Paris, and that the Foundation should be set up by means of an agreement between representatives of the Governments of the member States within the Council. Even the exact form of that agreement has yet to be determined, and it is also for consideration whether the Community should be a party to it together with individual member States.
My hon. Friend the Member for Farnworth asked what sort of a body it would be. All I can say to him at this stage is that it seems likely that the agreement will be in the form of a convention, with the possibility of provisional application to enable the Foundation to start work without delay.
As was foreseen in the document, we expect that an initial endowment will be provided to the Foundation from the


Community budget. We have had an argument and a discussion about Article 235. This matter is uncertain. What is certain is the Government's determination with regard to accountability. En negotiations in Brussels we have been very properly and rightly concerned, as my right hon. Friend the Member for Battersea, North is, to ensure that the Foundation should be fully accountable.
As my hon. Friend the Under-Secretary of State for Foreign and Commonwealth Affairs has said, we are seeking to ensure that there is maximum control of expenditure by member States. We also hope to ensure that the objectives and scope of the Foundation are clearly set out and that the audit procedures are adequate to ensure that the funds allocated to the Foundation are used for the purpose intended. I believe that these points offer adequate safeguards on the question of accountability.
I should like to make a few comments on the sort of thing that the Foundation hopes to do. It is important to remember that there is at present no institution that is responsible for furthering human understanding within the Community outside a Government framework. The concept of a European Foundation, as it has developed, is not a grandiose one. As my right hon. Friend the Prime Minister said—I should like to quote something else that he said—
There can be no harm, whatever view we may take about the Community, in getting to know the other people of Europe better."—[Official Report, 10th April 1978; Vol. 947, c. 991.]
Surely there can be no harm in promoting human contacts, in promoting human understanding, and in helping to break down any barriers of prejudice, suspicion or misunderstanding. I believe that a Foundation run on modest but effective and controlled lines could have a new and constructive orientation in supporting existing national or bilateral initiatives by voluntary and other bodies, and in giving them a European dimension.

Mr. Jay: In view of what he has said, will my hon. Friend assure me that the Government will not agree to this Foundation going beyond the functions that he has just described—promoting

human understanding between members of the Community—and that it will have no functions related to what is described as European union or European integration?

Mr. Oakes: If my right hon. Friend will be patient, I was just coming to that point.
I was intrigued by the speech of the hon. Member for Merioneth (Mr. Thomas). His suggestion about minority languages and culture is precisely the sort of thing that the Foundation, which is not a Government body, could well support. I take exception to only one thing he said—his criticism of the Government over their support for the Welsh language. If he looks at what the French Government do in regard to Brittany and Corsica or what other European States do in regard to minority languages, he will agree that this Government are very generous.

Mr. Spearing: On a point of order, Mr. Deputy Speaker. Can you confirm that this business is exempted business and that it can run, if necessary, until 5.30?

Mr. Deputy Speaker: Yes. Of course, one expected not a point of order but a realisation by hon. Members that that happens to be the case. One can judge that, of course, by the length of the speeches. However, each hon. Member can participate only once in the debate.

Mr. Oakes: I come now to the important issue of federalism. My hon. Friend the Member for Putney described the Foundation as a sinister body for promoting a federal Europe. There is no such thing in the document. We need to take a balanced view of the proposal to set up the Foundation. I do not share the enthusiasm that it has aroused in some quarters, but nor do I share the alarmist fears expressed today.
Nowhere is federalism mentioned in these documents. Document R/774, which is the document approved by Heads of Government, talks of such things as social and cultural activities, contacts between social and professional groups and the provision of information on the life of people in Euorpe.
I do not mind people having information about people in other countries. It is a two-edged weapon. It may lead them to favour European union, or it may lead them to oppose it. But we should never deny people the right to the information on which they can make up their own minds.
We have had a useful debate. I say in conclusion that there is still—

Mr. Hugh Jenkins: My hon. Friend has quoted me on one point, and I thought that he intended to go on. The European Foundation was originally presented to us as an organisation for the encouragement and sponsorship of culture and the arts. My point, which the Minister has not adequately answered, is that it is a propagandist organisation to put over a particular idea.

Mr. Oakes: The point that I have tried to make is that the member States concerned will ensure that it is not a propaganda organisation. It is to give further information to allow people to make up their own minds.

Mr. Jay: Would my hon. Friend allow me to intervene, since he did not answer my earlier question? He is telling us in effect that these documents are not the final description of the nature of this organisation and that the Government will try to convert it into one more in accordance with the spirit of this House. Can he give us a clear assurance—that would satisfy the House—that when the changes which he forshadows have been carried into effect a further document making it clear what the Foundation will do and what its terms of reference are will be brought before the House and that the Government will enter into no final commitment until we have seen that, debated it and taken a decision on it? That would be a fair solution. I hope that he can give that assurance.

Mr. Oakes: It is implicit in what the Under-Secretary and I have been saying about this document, and in our views about accountability, that we shall prevent this from becoming a propagandist organisation. As to my right hon. Friend's second point about another document, I do not know the position about another

document coming before the House. Hon. Members have opportunities to question Ministers, which is a sufficient safeguard. That should ensure that they can deal with something which is contrary to the wishes of the House.

Mr. Jay: It is surely not treating this House properly to say that some completely different arrangement, of which we have no knowledge, will be agreed by the Government yet to give no undertaking that when this is done it will be brought before the House. I must ask my hon. Friend to say that when these negotiations which he has mentioned have been carried out some document will be brought before the House. It is perfectly fair and reasonable that we should be able to consider and debate it. Will my hon. Friend say that, until this is done, the Government will not commit this country to participation?

Mr. Oakes: I certainly cannot give my right hon. Friend an assurance as wide as that. The Under-Secretary and I have explained to the House the care and control that will be exercised by Ministers to ensure that this Foundation does not become a propaganda organisation. It is primarily a cultural and educational organisation. I therefore ask my right hon. and hon. Friends to take note of the documents.

4.11 p.m.

Mr. George Cunningham: I am a member of the Committee of the European Parliament which has a responsibility for this subject—the Committee dealing with social affairs and education. I can assure my hon. Friends that 99 per cent. of the members of that Committee will be absolutely committed to the idea of using such a Foundation for the promotion of the political concept of European union. That would be true of 99 per cent. of the total membership of the European Parliament as it is now and of any future directly-elected European Parliament.
By all means let the Government commit themselves against the proposition but let no one have any doubts about what the notions in Strasbourg, Brussels and Luxembourg will be. They are determined to use this and any other institution they can create for the pursuit of a


political end—one which is perfectly legitimate but with which many of us in this House disagree.

Division No. 238]
AYES
[4.12 p.m.


Anderson, Donald
Hampson, Dr Keith
Parker, John


Bennett, Dr Reginald (Fareham)
Harrison, Rt Hon Walter
Rippon, Rt Hon Geoffrey


Cocks, Rt Hon Michael (Bristol S)
Huckfield, Les
Silkin, Rt Hon S. C. (Dulwich)


Davidson, Arthur
Kaufman, Rt Hon Gerald
Tomlinson, John


Davis, Clinton (Hackney C)
Luard, Evan
Weatherill, Bernard


Deakins, Eric
Lyon, Alexander (York)
Williams, Rt Hon Alan (Swansea W)


Dormand, J. D.
Mitchell, David (Basingstoke)



English, Michael
Moyle, Rt. Hon. Roland
TELLERS FOR THE AYES:


Gilbert, Rt Hon Dr John
Nelson, Anthony
Mr. Thomas Cox and


Ginsburg, David
Oakes, Gordon
Mr. Peter Snape.


Glyn, Dr Alan
O'Halloran, Michael





NOES


Atkinson, Norman (H'gey, Tott'ham)
Litterick, Tom


Bell, Ronald
Pavitt, Laurie


Crowther, Stan (Rotherham)
Wise, Mrs Audrey


Cunningham, G. (Islington S)



Jay, Rt Hon Douglas
TELLERS FOR THE NOES:


Jenkins, Hugh (Putney)
Mr. Roger Moate and


Lee, John
Mr. Nigel Spearing.

Question accordingly agreed to.

Resolved,
That this House takes note of EEC Documents Nos. COM(77)600, R/325/78, R/734/78, R/774/78 and R/2982/77 on the European Foundation and Cultural Sector.

STATUTORY INSTRUMENTS, &c.

Mr. Deputy Speaker (Sir Myer Galpern): In order to save the time of the House, I propose to put together the Questions on the three motions to approve Statutory Instruments.

Motion made, and Question put forthwith pursuant to Standing Order No. 73A (Standing Committee on Statutory Instruments, &amp;c.).

SOCIAL SECURITY

That the draft Social Security Benefits Up-rating Order 1978, which was laid before this House on 25th May, be approved.
That the draft Supplementary Benefits (Determination of Requirements) Regulations 1978, which were laid before this House on 25th May, be approved.
That the draft Child Benefit and Social Security (Fixing and Adjustment of Rates) Amendment Regulations 1978, which were laid before this House on 25th May, be approved.—[Mr. Walter Harrison.]

Question agreed to.

Question put:

The House divided: Ayes 28, Noes 10.

STUDENTS' GRANTS

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Walter Harrison.]

4.24 p.m.

Mr. George Cunningham: The subject I want to raise in this debate is that of students' grants, and more particularly the so-called parental contribution to students' grants—that is, the deduction from the grant made according to the income of the parents of the student. More particularly still, the point I am raising is the discrimination which exists in assessing parential income between parents who pay rent for the home in which they live and parents who have a loan for buying a house and who are permitted to deduct from their relevant income the amount of any interest they are paying on that loan.
Before coming precisely to that point, I should like to put to the Minister some anomalies which exist in the arrangements as they are now in order to try to persuade him that the system he is operating, and is generally defending, is one which has many anomalies in it of what I would regard as an unsustainable nature. It is high time that the whole system was looked at in order to try to bring into it a higher degree of consistency and logical defensibility.
The so-called parental contribution is related to the income of the parents. If


the income of the parents is above a certain threshold, the parent is expected to contribute a certain amount of the excess towards the student grant. The first anomaly to which I want to draw attention is that the scale for that contribution is inverted according to what one would think the natural way of doing it. The threshold of residual income in the coming academic year is, I think, £3,800. If parents' residual income is £3,800, some parental contribution is required. If the residual income is between £3,800 and £5,200, the parental contribution is 20 per cent. of any excess over £3,800. Then we come to a tranche between £5,200 and £7,300 of residual income where the parental contribution becomes only 10 per cent. Above £7,300, the parental contribution of any excess is only 8⅓ per cent.
I am sure that the Minister will agree that on the face of it that is a curious thing in that the person who is at the lower end of the scale is expected to contribute a larger proportion of his excess over the threshold than a person who is at the upper end of the residual income scale. That has not always been the case. In at least the 1971–72 academic year—I think it was the practice generally up to a few years ago—the parental contribution was expressed as a fixed sum, which was small, plus a fixed percentage of the excess of income and that percentage did not vary once the initial threshold was passed. The effect of that anomaly is, of course, that proportionately the systems bears harder upon the person at the lower end of the residual income scale, provided he is above the initial threshold, than it does on the person at the upper end of the residual income scale.
For example, if we have two lots of parents roughly on average earnings, but Family B has £100 more than Family A, Family B will have to contribute £20 out of that excess to the parental contribution. But if we have two other families which have roughly £7,000 a year of residual income, and again one has £100 more than the other, the difference in parental contribution between the two families will be only about £10, or even only £8 if they have a slightly higher income. That curiosity needs to be looked into.
Secondly, we have the oddity that if there are parents who have two children at college or university, and in respect of the first child the parent is required to make a parental contribution of, let us say, £500, that £500 of assumed expenditure is not deductible in assessing the parental contribution appropriate for the grant given to the second child when he goes to college or university. I would have thought that that was one of the most obvious deductible items to introduce into the system.
Instead, there is a fixed sum deducted. If there are two children receiving grant, next year it will be £95. So, if the parent is contributing £500, he has only £95 allowed as his assumed contribution in respect of the first child. It is even more odd, because, if the parent is contributing to the first child only £50 parental contribution, nevertheless he gets a deduction on his residual income of £95. I do not know who dreamed up that kind of arrangement, but it is hardly defensible.
Then we have the fact that life insurance premiums are deductible, and deductible, I might say, in full, and not as to 50 per cent. of the premiums which is the rule for tax purposes. But why should life insurance premiums be deductible at all, especially life insurance premiums to an endowment insurance scheme? In pure life insurance, the premiums will be so small that it does not really matter what we do. But an endowment insurance scheme can have premiums at a very high level, and such premiums constitute, in effect, savings. They belong not to current revenue activities but to capital activities. Why should they be deductible?
Once again that feature of the system benefits the better off who can afford to have high premiums to that kind of disguised savings scheme, as against the person on average earnings who cannot afford to do so. It means that if a person takes out an endowment insurance scheme and has, say, premiums of £1,000 a year, in addition to getting the tax relief he would have a parental contribution effect which would mean that the real cost to him was considerably less than the notional cost.
I might also point out that, although the Department says that it tries to keep


these arrangements in line with tax practice, the limit for insurance premiums is one sixth of income in the case of the tax system but 15 per cent. of income, which is not quite the same thing, in the case of parental contribution.
Finally, in the way of anomalies, I am not sure whether the mortgage interest which is deductible is limited to the interest on a loan of £25,000—the limitation which applies in the case of tax relief. As I read the relevant regulations, that is far from clear, because it says on page 28 of the regulations that what is deductible is
the amount of any sums paid as interest (including interest on a mortgage) in respect of which relief is given under the Income Tax Acts…
As I read that, it is doubtful whether the interest which has to be deducted is limited to the interest on £25,000 such as applies in the case of the tax system.
It is after pointing out that the system is shot through with that kind of anomaly that I come to the anomaly to which I wish to draw special attention, namely, that in assessing residual income, a deduction is made for interest on a house loan but no deduction is made for rent.
I have been concerned with this subject for about five years, as far as I can see from my files. Over many years, Ministers have drawn a distinction between rent and mortgage interest and suggested that if we were to permit rent to be deducted, there would arise an irrestible campaign to have capital repayments on a mortgage also deductible. I do not think that there is anything in that argument. It is absolute rubbish.
Rent and interest payments are conceptually as near identical as two different things can be. Neither has any element of saving or of debt amortisation in it. Both are current payments for current usage. Both are current payments for current usage of housing facilities. They are identical, whether we are talking about council rents or private rents. I do not think that if we made the change that I propose the Minister would be under any logically defensible pressure to make repayments of capital deductible as well. Also, the Minister's notion that capital repayments are not deductible is wrong—and I shall come to that later.
I know that the Minister and his predecessors have relied on the Anderson Report of 1958 which considered this matter and which advised the Government of that time against any change in the then arrangements. My answer to that is that it is our duty to look at the arrangements to see whether they are logically defensible, and not look at the recommendations of a Government Committee.
The fact is that we have changed many of the arrangements as they were at the time of the Anderson Report. For ex ample, insurance premiums are now deductible up to 15 per cent. of income and not up to 10 per cent. as was the case at the time of Anderson, and which Anderson recommended should be continued.
Secondly, the system was never terribly close to the tax practices. The whole of insurance premiums are deductible, and not only half as applies in tax. There was a similar arrangement, although not identical, operating to that 50 per cent. rule at the time of the Anderson Report.
The main reason why I would argue against Anderson is that it is a sloppy bit of thinking, if, indeed, one can call it thinking. When the report addressed itself to this subject, this was the mighty advice that it gave, and I quote from paragraph 208:
We have considered whether rents should also be taken into account, but we have concluded that there is not sufficient reason to make an exception in this respect to the general principle stated in paragraph 203.
That principle was that one should stick as closely as possible to the tax arrangements.
I do not find that a particularly overwhelming or persuasive argument. I do not find it very logical. Therefore, whatever else the Minister does, he should take the Anderson Report and chuck it out the window. It is not persuasive enough and the material is not there to lead us to overturn our own conclusions.
At the time of the Anderson Report all interest was deductible for tax purposes, whatever the purpose of the borrowing. Therefore all interest was deductible for the purposes of assessing the parental contribution.
There has now been a major change in that only interest paid on house loans is deductible for tax purposes. It may have been justifiable not to permit rent to be deducted at that time and to permit mortgage interest to be deducted, not because it was mortgage interest but because all interest was deductible for tax purposes.
The situation now is very different. The proper way to look at this is by agreeing that we now have two different forms of housing payment. Therefore why should one be deductible while the other is not?
The financial effects of the system as it operates now can be put in this way. Let us assume that there are two neighbours, Mr. A and Mr. B, each paying £600 in rent, which is not unusual these days, at least in London. One of them—Mr. B—decided to buy a house on a loan of £8,000 so that he will be paying interest of about £800.
He will find his parental contributions reduced by £160 a year, or more than £3 a week—that is, assuming that both Mr. A and Mr. B are on the low income scale but above the threshold. The actual cost to Mr. B of his £800 of interest will be only £376. In addition to the tax relief on it, he will have £160 knocked off the effect of his parental contribution.
But if Mr. B and his advisers have their wits about them, they can do rather better than that. What they will do is to take out the mortgage on the so-called endowment insurance method. Instead of paying off the capital bit by bit every month, they will pay off no capital during the life of the scheme but will invest in an endowment insurance policy. When that policy matures at the end of the period, the proceeds will be used to pay off the loan.
In that case, if the interest is £800 and the endowment insurance costs £200 a year, total outgoings of £1,000 per year, the effect upon parental contribution will be not £160 but £200. The actual cost to Mr. B in taking on the extra £1,000 of expenditure will be only £470 because of the combined effect of parental contribution and tax relief.
By that means capital repayments are deductible, in effect, so long as the person concerned has his wits about him enough to undertake the operation on the endowment insurance method, because in that case he has deducted not only the interest payments but also the premiums on the insurance policy in total, 100 per cent., provided that they do not exceed 15 per cent. of his income, which they will not. Both the interest and the effective amortisation of the debt are deductible.
Therefore, this system is unsustainable, not only because of that last anomaly, but because basically rent and interest, event if we were only talking of interest, are the same thing. It is current payment or current usage of the same kind of facilities—namely, housing. The present arrangements are particularly hard on council tenants and private tenants on average earnings because of the curious inverted scale to which I referred earlier. The arrangements are also discriminatory even to people not on average earnings but higher up the scale as between all kinds of tenants and all levels of people who are buying their own homes.
I am certain that if the case for and against the present arrangements were fully exposed in the House, with somebody here to listen, there would be a majority in the House who would agree roughly with the case I am putting forward. I suggest to the Minister that it is now time for the whole matter to be reviewed I believe that the Government—whether it be the present Government or the next one—will lose on this matter. The anomaly will have to be removed, and I know that that would be the majority view of the House.
The request I put to the Minister is that Department of Education and Science and Treasury Ministers should have consultations with myself and other Members in the House who are concerned about this matter, so that we can draw up the case for and against the proposals with a view to making the system that we apply more logically defensible than it is now. We should remove this anomaly, which causes a great deal of concern to those who suffer from it and who know the system well enough to realise that it is discriminatory between them and others in essentially identical circumstances.

4.44 p.m.

The Minister of State, Department of Education and Science (Mr. Gordon Oakes): I wish to thank my hon. Friend the Member for Islington, South and Finsbury (Mr. Cunningham) for raising this matter. I assure him that, far from there being nobody in the House to listen to him, there was you, Mr. Deputy Speaker, and myself as Minister responsible for higher education. My hon. Friend made a very persuasive case in the limited time available to him for an Adjournment debate.
Let me try to deal with the regressive effect at the lower end of the scale, and let me take up the point about parents who have two children at university. That is a little outside the subject of rent, and perhaps he will allow me to write to him on that aspect. The main question is whether rent should be deductible in the same way as is mortgage interest. Let me take a few minutes to describe how the system has arisen.
The mandatory student awards system rests on the principle that students should be enabled to attend their courses without hardship, but that the cost of their personal maintenance should be shared between public funds, the students themselves, and, if appropriate, their parents or spouse, according to their ability to pay. Contributions front parents are set at levels that they can reasonably be expected to be able to afford. As a measure of this, for the 1978–79 academic year no contribution at all will be expected where the parents' residual income—that is, the gross income less specified allowances—is £3,800 a year or less. This corresponds to gross pay of around £80 a week.
The awards arrangements, as my hon. Friend is well aware, are administered by local education authorities under regulations made by my right hon. Friend. Clearly, where administration is entrusted to more than 100 local authorities, the regulations must be detailed and precise to ensure uniformity of treatment; and they must also be as straightforward and simple as is consistent with reasonable equity of treatment, otherwise administration becomes unwieldy, costly and inefficient. The regulations must also be demonstrably fair to students and their parents, whatever their personal circumstances. In practice, it is a question of

achieving a balance between what is equitable and what is administratively practicable.
One way in which these two often conflicting objectives have been reconciled is by basing the computation of parents' income, for the purpose of assessing their contribution to the grant, on income tax principles and practice. Thus, the gross income which is the starting point of the assessment is the parents' gross income computed as for tax purposes. Deductions from the gross income to arrive at residual income, on which parental contributions are levied, are allowed only in respect of items which can be allowed for income tax relief. It is for this reason that mortgage interest payments are offset against gross income but rent is not.
The arrangement whereby the assessment of parents' income for awards purposes follows income tax practice is of long standing. It was recommended by the independent Anderson Committee, which my hon. Friend mentioned, in its report in 1960, which forms the basis of the present grants system, but it had been in operation long before that. Over the years, it has been found to provide a logical, consistent and equitable basis for assessing contributions for parents with a wide range of personal circumstances. There is, admittedly, an element of rough justice—that is inevitable when one is trying to maintain a system which is capable of reasonably efficient administration. Nevertheless, the present arrangement has provided the basis for a fair assessment for the vast majority of parents. Over the years, successive Governments have been urged to modify the system to allow for various items not at present covered, or to change it altogether. They have looked at these suggestions, but have concluded that any alternative would be likely to produce more anomalies, not fewer, and to be less fair to parents, not more.
I have a good deal of sympathy with my hon. Friend's contention that rent, like mortgage interest, should be allowable against gross income in assessing parental contributions. We aim to make the system as fair as possible, and I appreciate the argument that there is an element of unfairness here. The fact is, however, that if we were to depart from income tax practice, especially in such a major


respect, we could endanger the system which, as I have said, has been found over many years to produce fair results for most parents. We know from experience that one departure from an established principle leads to others. If we were to accept rent payments as allowable against gross income, we would soon be urged to allow owner-occupiers the cost of repairs and maintenance. As my hon. Friend knows, rent often includes an element for repair and maintenance, as well as mere interest costs. Indeed, in many instances it includes a contribution towards rates as well and therefore the simple income tax system has appeared to be much more administratively convenient and, on the whole, fair.
My hon. Friend rightly said that the full amount of insurance premiums up to a specified limit are deducted, whereas only a proportion is allowed for tax purposes. In other matters of detail, there are minor differences. Some items are allowed for award purposes under slightly different conditions, but these are differences of minor detail only and are nothing like the major departure that he is urging. It is in departing from tax practice with regard to the range of allowable items where the difficulties and dangers lie. I understand that the tax principle is followed on the £25,000 limit. The conditions that apply to income tax would apply to the contribution for a student grant.
So much for the difficulties and dangers involved in moving away from present

arrangements. I would not suggest that these arrangements, in so far as they do not provide for rent to be allowed against income, are wholly unreasonable. I have said, and I repeat, that I have some sympathy with my hon. Friend's argument. I have pointed out that rent and mortgage interest are not exactly parallel. My hon. Friend has not taken that point, but it is often put to me in arguments by other hon. Members and certainly by people outside the House.
My hon. Friend has made clear that, as I said, successive Governments have looked at this system. It is an old system which, in the light of what my hon. Friend said, deserves looking at again in view not only of the anomaly of rent but of the other anomalies that he has pointed out. I say that because, in addition to student grants, we have considered, and will again be considering, the question of post-statutory school grants for the 16- to 19-year-olds. Should they follow student grants or should a new pattern be adopted? In view of what my hon. Friend said today, I think that matter must be looked at.
Therefore, I think that, without giving any commitment—my hon. Friend will agree that I cannot make a commitment now because other Ministers are involved—we should look at some of the compelling arguments that he has put before the House today.

Question put and agreed to.

Adjourned accordingly at nine minutes to Five o'clock.